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Carney: ‘Bank of England running out of options’ on economy

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The Government needs to take responsibility to improve the economy, according Bank of England governor Mark Carney.

The Times reports that Carney believes the BoE has no tools left to improve the UK’s future economic outlook.

In a Berlin speech on economic reform last night, Carney said politicians need to take tough decisions on economic policy and public spending.

He said: “Long-run prosperity was never in the gift of monetary policymakers.

“As the tenth anniversary of the start of the crisis approaches, a consensus is growing that escaping this low-growth low-inflation trap will require a rebalancing between monetary, fiscal and structural policies. The last are the most important.”

Carney backed investment in the speech, due to record low interest rates.

In August, Carney said the Bank had options to stimulate the economy that did not involve more base rate cuts.

At the press conference following the base rate cut to 0.25 per cent, Carney was repeatedly asked if interest rates could drop below zero.

He said: “I am not a fan of negative interest rates. We have other options to provide stimulus.

“We are not intending to move to negative interest rates. One would not want to see deposit rates go below zero.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. From my minds eye, everything is geared (from a political and economy view point) to get the British public to spend, spend, spend and they are not doing this, (well fast enough anyway), so negative interest rates might well be inevitable ?

    From my experiences (from my clients) of 2016 is that they want to invest, invest, invest !

    Some may and will argue, why pay of debt with interest rates so cheap when potential returns from investments are or could be higher ? couple that with the mind set that people may be really thinking “do I really need new clothes, new car, new TV etc etc etc !

  2. Cutting the BBR to 0.25% doesn’t seem to have made any difference at all and nor does a further round of QE. We have other options to provide stimulus, says Mr Carney. Such as?

  3. It may help if the banks/lenders actually passed on the interest cuts. A client of mine who stupidly still has a SVR mortgage is paying 4.89% and has been since the BOE rate went to 0.5%. Is it any wonder that a lot of mortgagees don’t notice much difference. The best that the Governor can do is say “I do hope the banks pass on this most latest cut to customers”.
    Why is the FCA not hammering these lenders under the banner of TCF for charging (in probably most cases) loyal customers almost 20 times the rate of interest they are being charged? It is disgusting

  4. Why is your customer sitting on SVR?.

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