Bank of england

Friday

Fraser Nelson

Will Theresa May end the era of easy money and call time on QE?

When Theresa May was gearing up for a summer-long leadership campaign, she identified a worthy target: George Osborne’s addiction to easy money and the whole notion of quantitative easing. Rock-bottom interest rates and QE, she said, boost asset prices – and, in so doing, transfer wealth to the richest. When she became Prime Minister, the Bank of England decided to do another £70 billion of QE. We can guess that the effects will be the same as they were last time: more inflation and a surge of asset prices, making the richest even richer. As I say in my Daily Telegraph column today, QE is a magic wand of inequality.

Friday

Helen Nugent

How the interest rate cut affects you

Borrowers rejoice, savers despair. The decision by the Bank of England to cut interest rates to a record low of 0.25 per cent dominated the financial news yesterday. The last time rates were cut, back in March 2009, the world was in the grip of the financial crisis. Ah, life was different then. Leicester City were languishing in League One, Labour’s John McDonnell had been suspended from Parliament after picking up the House of Commons mace, and the Bank was pumping tens of billions of pounds into the economy as well as buying government bonds and corporate debt. Today McDonnell is Shadow Chancellor and Leicester City are about to start the new football

Thursday

Ros Altmann

What about savers and pensions? Ten thoughts on today’s rate cut

Today’s rate cut and announcement that there will be more QE means more pain for UK pensions – yet the Bank of England statement seems to completely ignore the pension impacts of its policies. Estimates suggest pension deficits are now approaching £1trillion – which, surely, cannot be sustainable. Here are some thoughts on the today’s decision to cut the interest rate to 0.25pc and to rev up QE again. Lower rates make pensions more expensive: The amount of money that is needed to pay promised pensions over future decades depends on how much return one is expected to earn on the money set aside for pensions right now. The lower the future expected returns, the more money must be put in

Matthew Lynn

The Bank of England has just taken a huge risk – on a Brexit boom

Plunging output. The FTSE in freefall. A financial collapse. Unemployment rising rapidly and trade falling off a cliff. At first glance, you might think that was an accurate description of the British economy, given the decisions that the Bank of England took this morning. After all, to cut interest rates to their lowest level in history, to re-launch quantitative easing, and to promise more action down the road, the economy must be in crisis, right? Except, er, it isn’t really. While there are good reasons to argue that the decision to leave the European Union may well hurt the economy in the medium-term, there is no immediate emergency. In fact,

Tom Goodenough Tom Goodenough

‘Stimulus now’: Bank of England cuts interest rate down to 0.25pc

As expected, the Bank of England has cut base interest rates down to 0.25 per cent- the first movement since rates were cut to an ’emergency’ low of 0.5 per cent in March 2009. There’s a “clear case for stimulus, and stimulus now” said Mark Carney, BoE governor – so the money printing machine is being put back into action. About £60 billion is to be created electronically, and used to lend money to the government via gilt purchases. It will save Theresa May’s government a fortune: the rate of interest charged on the many loans it takes (ie, gilt yields) collapsed to 0.63pc today; almost half the rate they

Monday

Violet Hudson

Money digest: Britain braced for ‘Super Thursday’ interest rate cut

Britain’s financial status could be downgraded this week amid reports the Bank of England will cut interest rates on Thursday. The Guardian says that the Bank’s Monetary Policy Committee will examine the latest growth forecasts and inflation report, and then make a decision on whether to cut interest. If they do, it will be the first time the rate has changed since it was set at 0.5 per cent in March 2009. Mark Carney, the governor, warned that a vote for Brexit could tip the UK into recession and the figures seem to back up this pessimism, according to the paper. In May, growth was forecast at 2.3 per cent, but economists now

Thursday

John O'Neill

Bank of England holds the base rate at 0.5 per cent

So, the Bank of England didn’t do it: against market expectations that there would be a cut, the base rate has been kept at 0.5 per cent, where it’s been since March 2009. The pound shot up by 1.5¢ against the dollar on the news. #BankRate maintained at 0.5% and Asset Purchase Programme at £375bn. The MPC voted 8-1 on #BankRate and unanimously on the APP. — Bank of England (@bankofengland) July 14, 2016 The Bank is keeping its powder dry and today’s hold doesn’t mean there isn’t a cut coming: The Monetary Policy Committee is meeting again in three weeks’ time when it will have new forecasts for the economy and more

Wednesday

Charles Moore

Will Mark Carney Brexit by Christmas?

Critics say the Bank of England put itself under suspicion by entering the referendum fray. Now Mark Carney says its warnings are being borne out by the post-referendum economic reaction. He misses the point. By having made those warnings himself, even if he sincerely believed them, he became like a politician trying to win, rather than a public servant trying honestly to manage either outcome. The more loudly he tries to vindicate himself and attack the motives of his accusers, the more clearly this is proved. It would damage confidence if Mr Carney were to leave his job suddenly, particularly if the government pushed him; but surely he should quietly

Tuesday

Tom Goodenough

Mark Carney clashes with Jacob Rees-Mogg over BoE’s Brexit warnings

Jacob Rees-Mogg and Mark Carney’s clash at this morning’s Treasury Committee was a masterclass in passive aggressiveness veiled in pleases and thankyous. From the words being said, it wasn’t clear there was any enmity in the room. But Carney’s expressions couldn’t have made things clearer: there is certainly no love lost between these two. Before the referendum, Rees-Mogg said Carney had come under ‘undue influence’ during the referendum campaign from the Treasury. Today, the Tory MP went on the attack in the politest way possible as he tried his trump card question once again about whether Carney would have conducted himself in the same way during a general election. Last

Tuesday

Matthew Lynn

Mark Carney should admit that the Bank of England fell for Project Fear

A stable government, led by a good-looking modernising liberal. A free trade agreement that gives it unrestricted access to the largest economic bloc in the world. Rising prices and a return to growth. There must be times when the Governor of the Bank of England Mark Carney wishes he was still in charge of the relatively simple Canadian economy, and had never been tempted to try and steer the damp and grey island on the other side of the North Atlantic through a moment of national angst. There may be worse jobs in the world – replacing Chris Evans on Top Gear, perhaps, or joke-writer for Theresa May – but

Thursday

Tom Goodenough

Mark Carney uses interest rate decision to put the boot in over Brexit again

The Bank of England’s decision to keep interest rates pegged at 0.5 per cent won’t surprise anyone. What is more interesting, after today’s row involving Mark Carney, is how much the Bank had to say about the EU referendum. Brexiteers hoping Mark Carney and the BoE’s Monetary Policy Committee would keep quiet about next week’s vote will be disappointed. In its meeting minutes, the MPC gives it both barrels when warning about the dangers of Brexit. The MPC says a vote to leave would send sterling’s exchange rate tumbling. It goes on to add that: ‘As the Committee set out last month, the most significant risks to the MPC’s forecast

Tom Goodenough Tom Goodenough

Bank of England Brexit bust-up shows the referendum campaign is getting nastier

With a week to go until the referendum, nerves are running high in both the ‘Leave’ and ‘Remain’ campaigns. This morning, we’ve seen that nervousness manifest itself in a spat between senior Tories and the Treasury and the Bank of England. Iain Duncan Smith, Michael Howard, Lord Lamont and Lord Lawson have signed a letter saying both the BoE and Treasury have been ‘peddling phoney forecasts’ to scare people into backing ‘Remain’. In their letter to the Daily Telegraph, they go on to say that: ‘There has been startling dishonesty in the economic debate, with a woeful failure on the part of the Bank of England, the Treasury, and other

Friday

Tom Goodenough

The IMF serves up more Project Fear – and it’s working

Another day, another warning about the economic bombshell which would follow Brexit. This time it’s the turn of the IMF. In a press conference at the Treasury, Christine Lagarde spoke of the outcome of a vote to leave the EU ranging from ‘bad to very bad’. Whilst the IMF’s report said: ‘A vote to leave the EU would create uncertainty about the nature of the UK’s long-term economic relationship with the EU and the rest of the world. A vote for exit would precipitate a protracted period of heightened uncertainty, leading to financial market volatility and a hit to output.’ George Osborne was clearly grateful for the support of the

Thursday

Tom Goodenough

Mark Carney isn’t butting out of the Brexit debate any time soon

The Bank of England isn’t going to butt out of the Brexit debate any time soon it seems. Today’s interest rate decision produced few surprises with the Bank sticking at 0.5%. But the headlines are focusing instead on its warning about the consequences of a vote to leave the EU. The wording about the dangers of Brexit was the starkest yet. The Bank of England said: ‘A vote to leave the EU could materially alter the outlook for output and inflation and therefore the appropriate setting of monetary policy. Households could defer consumption and firms delay investment, lowering labour demand and causing unemployment to rise’ As doomsday scenarios go, excluding

Thursday

Martin Vander Weyer

If you’re riding the FTSE rebound you might still want to sell in May

When the FTSE100 fell close to 5,500 in February, we all said ‘Mr Bear is back’. On Tuesday the index hit a high for this year of 6,400, and we all wondered whether Mr Bear had done what I said he wouldn’t, and shuffled back to hibernation. But the truth is that shares have lately moved in parallel with the oil price, which has perked up partly for technical reasons including temporary curtailment of supply from Kuwait; and a major element of the FTSE recovery is in commodity stocks that had been wildly oversold. So we shouldn’t read any great swing of confidence into a market still 600 points down

Tuesday

Tom Goodenough

Mark Carney wades into Brexit debate again

Whatever might be said about the Governor of the Bank of England, it’s hard to fault his persistence. Mark Carney has made a habit of wading into the debate surrounding the EU referendum. And based on his appearance in front of the Lords Economic Affairs Committee this afternoon, he isn’t planning on stopping any time soon. Carney repeated the MPC’s warnings about the ‘threats’ from the forthcoming referendum being ‘the most significant near-term domestic risk to financial stability’. He also suggested that the effects of the vote on 23rd June might be materialising already: He spoke carefully and was clearly mindful of criticism he has faced before for appearing to

Thursday

Matthew Lynn

The Bank of England should butt out of the Brexit debate

Unelected. Technocratic. Exercising a great deal of power over people’s lives, without much in the way of accountability. Staffed by well-meaning, over-educated experts, big on theories and short on experience, and run by a smooth globe-trotting boss who is immaculately plugged into the Davos set. It is not hard to see why the Bank of England, especially under its Canadian Governor Mark Carney, is instinctively pro-EU. It looks across to Brussels and sees an institution very like itself. So it is no great surprise to see the Bank making subtle, and not so subtle, warnings, about the risks of the upcoming referendum. It was at it again today. Its decision

Thursday

The Spectator

Portrait of the week | 10 March 2016

Home The Bank of England arranged for banks to be able to borrow as much money as they needed around the date of the EU referendum, lest there should be a bank run. After saying in a speech that Britain’s long-term prospects could be ‘brighter’ outside the EU, John Longworth was suspended as director-general of the British Chamber of Commerce, from which he then resigned so that he could speak freely. Four arrests followed the explosion of a bomb in Belfast, which wounded a prison officer working at Maghaberry Prison near Lisburn in Co. Antrim. The law against smoking in public buildings does not apply to prisons in England and

Charles Moore Charles Moore

The Spectator’s notes | 10 March 2016

Surely there is a difference between Mark Carney’s intervention in the Scottish referendum last year and in the EU one now. In the first, everyone wanted to know whether an independent Scotland could, as Alex Salmond asserted, keep the pound and even gain partial control over it. The best person to answer this question was the Governor of the Bank of England. So he answered it, and the answer — though somewhat more obliquely expressed — was no. For the vote on 23 June, there is nothing that Mr Carney can tell us which we definitely need to know and which only he can say. So when he spoke to

Wednesday

John O'Neill

Unemployment falls – but so does pay growth

The unemployment rate fell to 5.1 per cent in the three months to November, putting it at the lowest level since 2006 – and back to its average over the six years before the crisis. Back to what the Bank of England regards as the “equilibrium” rate. [datawrapper chart=”http://static.spectator.co.uk/DUFV6/index.html”] The other side of the coin is that pay growth is down too. Excluding bonuses it’s fallen to a sluggish 1.9 per cent year-on-year, around half its pre-crisis rate. Workers’ spending power is still growing – but that’s driven by low inflation. [datawrapper chart=”http://static.spectator.co.uk/u0fNr/index.html”] At the equilibrium unemployment rate, the Bank of England thinks a further fall in joblessness could drive up inflation