View more on these topics

MPC member admits “seriously underestimating” the crisis

Departing Monetary Policy Committee member Kate Barker has admitted she seriously underestimated the scale and impact of the financial downturn.

In her last speech as an MPC member at the National Institute of Economic and Social Research in London last night, Barker said she could not look back on her MPC career with satisfaction due to the Bank of England’s latent attempts to control the crisis with monetary policy alone.

She said: “Certainly I seriously underestimated the scale of the downside risks from a potential financial crisis, and that implied overrating the ability of monetary policy to offset this shock.”

Barker said the Bank should have taken a longer term view when assessing its options to deal with the crisis.

Barker also admitted that further quantitative easing might not help the economy as confidence drops in the benefits of fiscal stimulus. She said: “This could prove a concern, given that there are still some risks on the downside to the path of economic activity, including a continuing weakness in the world economy.”

Barker will leave the MPC on May 31. As yet the Bank of England has not named a successor to the role.

Recommended

Advisers braced for China correction

Advisers are bracing themselves for a short-term correction in the Chinese market as monetary policy tightening takes the steam out of the rally. Skerritt Consultants head of investments Andy Merricks says a short-term market correction is almost certain although the long-term story is “irreversible”. He says: “My main concern is over the fiscal tightening. If […]

State banks fail to pass on low rates

Some of the state-backed banks are not passing competitive mortgage rates to borrowers despite being given billions of pounds from taxpayers, according to figures from Moneyfacts.co.uk. It claims the state banks are placing higher priority on getting out of Government ownership than passing competitive rates to borrowers. RBS offered the most competitive rates of those […]

UK: mid-year review and outlook

By Mark Martin, manager of the Neptune UK Mid Cap Fund, and Scott MacLennan, manager of the Neptune UK Opportunities Fund H1 2014• Equity markets continued to show strength: despite a strong rally in 2013 driven by a market-wide re-rating, equity markets continued to generate positive returns for investors. Economic activity continued to be stimulated […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Underestimated the downside risk –
    Well at least although not leaving with “satistfaction” she is leaving with doubts about the limited remit the MPC had and still has.
    And she is now not so sure about QE “helping the economy”.
    Perhaps something may change then?
    QE the low IQ policy.

  2. Underestimated the downside risk –
    Well at least although not leaving with “satistfaction” she is leaving with doubts about the limited remit the MPC had and still has.
    And she is now not so sure about QE “helping the economy”.
    Perhaps something may change then?
    QE the low IQ policy.

Leave a comment