View more on these topics

‘Monetary policy levers futile against recent inflation shocks’

Bank of England executive director of markets and Monetary Policy Committee member Paul Fisher says there is little monetary policy could have done to offset the inflation shocks of the past couple of years.

In a speech to contacts of the Bank’s agency for Scotland today, Fisher said responding to short-term inflationary movements with monetary policy levers would cause disruption to the economy.

He said: “Given that changes in Bank rate, or asset purchases, take a long time to have their full effect on the economy, monetary policy needs to be forward looking.

“Trying to respond to every short-term movement in prices would probably be futile and would certainly involve a lot of unnecessary volatility.”

Base rate has been held at 0.5 per cent since March 2009. Minutes from the May meeting of the MPC show Fisher was one of the six committee members to vote in favour of keeping base rate at its record-low level.

Fisher added: “Putting up Bank rate could be exactly the wrong thing to do at this precise moment.

“For now, I believe there remains time to allow the economy to recover before the eventual tightening begins.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com