BOE Cunliffe: Monetary policy is not powerless...but

Author: Greg Michalowski | Category: Central Banks

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.
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