View more on these topics

Bank of England downplays low interest rate savings concerns


Bank of England monetary policy committee member Gertjan Vlieghe has hit back at criticism that low interest rates are hitting savers because most UK wealth is held in property rather than bank deposits.

Half of the UK household’s net wealth, which totals £10trn, is in property, Vlieghe said at Sheffield University on Monday evening.Only £1.5trn was in deposits, while the remainder was in other financial assets.

The Bank of England cut already record-low interest rates to 0.25 per cent at its August meeting in response to the UK’s vote to leave the European Union.

Prime Minister Theresa May has previously said that low interest rates, alongside quantitative easing, comes with bad side effects, namely inequality.

Vlieghe said monetary policy was always redistributive.

But to say that some groups are affected differently by monetary policy than others is quite different from arguing that some groups suffer outright from monetary stimulus.

“Once the effect of an improved economy on savers is taken into account, it seems to me that most savers benefit from monetary stimulus.”

Vlieghe added that most savers are also employed and that low interest rates combined with asset purchases have helped lower unemployment by boosting nominal aggregate demand.



Carney to leave Bank of England in 2019

Bank of England governor Mark Carney has extended his term to June 2019 when Brexit negotiations are expected to be completed. Carney’s decision means he will serve one year more than the five he had originally committed to, but he will depart two years short of a full eight-year term. In a letter sent to […]


Bank of England’s Carney warns on inflation hit

Bank of England governor Mark Carney says sterling’s fall helps the economy adjust, but that consumers will face difficulty going from “no inflation to some inflation”. Speaking at a roundtable in Nottingham, Carney said the price of goods and services is going to rise in the next few years, with food being the first product […]


Financial activity leaving London could be replicated in EU, says BoE

Any wholesale financial market activity that leaves London as a result of Brexit would likely be carried out elsewhere in Europe, according to a Bank of England governor. In a speech at the Association for Financial Markets in Europe’s annual dinner last week, Bank of England financial stability deputy governor Jon Cunliffe spoke about the challenges […]

Frexit & contagion risk in Europe

Many commentators have suggested the UK’s exit from the European Union will trigger a domino effect, leading to its eventual break-up. Neptune Head of European Equities Rob Burnett discusses the likelihood of this happening. Click here to read more Important informationInvestment risks Neptune funds may have a high historic volatility rating and past performance is […]


News and expert analysis straight to your inbox

Sign up