LONDON (MNI) – Paul Tucker, Deputy Governor at the Bank of England,
firmly rejected the charge that monetary policy has been detrimental for
savers.

In the wake of the publication of a Treasury Select Committee
report highlighting the apparently negative impact of quantitative
easing on returns for savers, Tucker said the best thing the Bank’s
Monetary Policy Committee can do is to bring about economic recovery,
and savers have a stake in that recovery.

Tucker said the MPC was sympathetic to savers and the impact of
ultra-loose monetary policy on their investments, but he made clear this
can not determine policy setting.

“It is certainly the case that all of us on the Monetary Policy
Committee, the nine of us, are immensely sympathetic to how savers have
been affected,” Tucker said in a question and answer session at the
Association of Corporate Treasurers annual conference.

“They didn’t cause this crisis and, yet the return on their
investments has in some respects been reduced by the actions we have had
to take,” he added.

However “had we not reduced interest rates as far as we have, and
had we not injected further money into the economy by buying government
bonds, which have bought down long term yields, the recession would have
been a lot deeper than we experienced,” Tucker said,

“Back in 2009 people were seriously worrying about deflation and
about depression. And the reason I say that is that those are
circumstances in which the investments of savers are absolutely
destroyed,” he said.

Savers, like everyone else, will benefit from the recovery.

“Savers are effectively investors in the future prosperity of our
economy. The most important thing that the macro-economic authorities
can do for savers is to bring about recovery in the economy,” Tucker
said.

“And that we will continue to do – so long as it is consistent with
achieving our 2% inflation target,” he added.

“We will, of course, look precisely at what the select committee
have had to say – they are the voice of parliament to which we are
accountable,” he concluded.

–London newsroom 0044 20 7862 7491; email: drobinson@marketnews.com

[TOPICS: M$B$$$,M$$BE$]