View more on these topics

Mark Carney: BoE could cut interest rates

Mark-Carney-close-up-focused-700.jpg

Bank of England governor Mark Carney says the central bank might cut interest rates to zero but will not drag rates into negative territory.

Speaking to the Treasury committee today, Carney said if the economy needed additional stimulus there were many things the bank could do, including cutting interest rates to zero, from the current 0.5 per cent rate, or buying more assets though QE.

Previously Carney said the Bank was firmly on a rate-rise agenda, rather than looking to cut rates further.

Insisting that the Bank could launch fresh stimulus measures, Carney said: “We could cut interest rates towards zero. We could engage in additional asset purchases, including a variety of assets.

“We could also provide a perspective where we could adjust our policy horizon. We could shorten our policy horizon over which we wanted to return inflation to target.”

However, Carney said the Bank will not be taking interest rates negative, as this measure has “serious” implications on financial services.

He said: “We have no intention, no interest in negative interest rates.

“We have other options and would take very seriously the impact of negative interest rates on financial services and building societies especially.

“The focus of our monetary stimulus is concentrated domestically; concentrating policy measures externally is far less productive than domestic monetary stimulus.”

Previously Bank of England chief economist Andy Haldane suggested there may be a need to move to negative interest rates. During a speech at the Portadown Chamber of Commerce in Northern Ireland, he said there may be a need to abolish cash too.

Speaking about future rate rises, Carney said the UK domestic economy is positive, but that must be balanced with disappointing signs from abroad: “We must weigh the two up and we’re not taking a policy decision today.”

Recommended

Mark-Carney-close-up-focused-700.jpg

Carney rules out imminent base rate increase

Bank of England governor Mark Carney has dismissed the prospect of an imminent rise in interest rates by revealing that base rate is likely to stay low for the foreseeable future. Last summer Carney said the decision to raise interest rates would likely come “into sharper relief around the turn of the year”. But giving a […]

Bank-of-England-BoE-Clock-700x450.jpg

MPC votes 8-1 in favour of keeping base at 0.5%

The Bank of England’s Monetary Policy Committee has once again voted to keep base rate at 0.5 per cent. Minutes from yesterday’s meeting show just one member, Ian McCafferty, voted for a rise. He believed rates should rise 0.5 per cent because “the path of domestic costs was more likely to lead to inflation exceeding […]

Bank-of-England-BoE-Clock-700x450.jpg

Bank of England votes to keep base rate at 0.5%

The Bank of England’s monetary policy committee has again voted to keep base rate at 0.5 per cent. The decision makes it 81 months since the BoE last changed base rate. The committee voted eight to one in favour of holding rates and was unanimous in wanting to hold the current programme of quantitative easing […]

Guide cover resized

Guide: Johnson Fleming’s managed auto-enrolment service for SMEs

Johnson Fleming has launched its new managed auto-enrolment service, designed to support SME businesses of up to 250 employees. The managed auto-enrolment service is not just about providing businesses with a software system for them to manage themselves, but more about outsourcing the administration of the project and scheme to Johnson Fleming’s auto-enrolment staff.

Newsletter

News and expert analysis straight to your inbox

Sign up
Comments
  • Post a comment
  • Mark Hanson 24th February 2016 at 6:29 am

    I think it was Keynes who said “when the facts change I change my mind, what do you do?”

    If .5%interest rates don’t get people spending then zero is going to have marginal impact. We need fiscal stimulus and if the govt are too ideologically opposed then the bank might consider buying housing association bonds directly and either retiring old ones or pumping new money into the PRODUCTION of homes to stimulate the economy.

  • Stuart Duncan 23rd February 2016 at 5:47 pm

    Mr Carney’s forward guidance was well-intentioned. When it comes to him pointing the way forward, though, the image that comes to mind is of one of those Hindu Goddesses with multiple arms.

  • Chris Hulme 23rd February 2016 at 5:46 pm

    That could be today Stuart. Taking lead from Tony Ben: we needed a governor to be a signpost yet we have a weather vane. Seems to be a popular way to act in Government or similar office these days.

  • Stuart Gregory 23rd February 2016 at 5:18 pm

    How long before he’s not deemed credible for the role? Pre-knighthood perhaps?