BOE Cunliffe: Monetary policy is not powerless...but
BOE Cunliffe speaks on monetary policy in London
- Low level of interest rates a structural trend
- monetary policy is not powerless, but expect more tools will be needed to stimulate demand in a downturn
- higher levels that may be more sustainable in"low for longer" world (I assume he means low rates).
- It is too early to say that we need more coordination between monetary and fiscal policy
- need to approach any fundamental reengineering of relationship between BOE and treasury very cautiously
- lower market interest rates probably reflect over pessimism about long term growth
- expects increase pressure on banks to hunt for yield, take more risk
- as not yet seen banks take significantly more risk, regulation and memory of crisis may be restraining this, but this could be changing
- tension US reported last month were surprised
- repo tension may tell us something about fragility of sentiment
- Brexit uncertainty generally weighing on investment
- global economy is weaker, trade disruption hurting investment globally
- economic outlook weaker than expected a year ago, reiterates rates can move in either direction after no deal Brexit
Cunliffe leans to the dovish side.