A pet rock could do Mark Carney’s job at the moment. Nothing against the good looking and dapper head of the Bank of England (BoE). If Ben Bernanke had the courage to do nothing – instead of instigating bailouts and interest rate cuts – perhaps our problems today wouldn’t be as bad. But Carney hasn’t raised interest rates once in his tenure at the BoE.
If he continues doing nothing at this pace, he’ll become just the second governor to not raise interest rates once in his whole term. The last time that happened was between 1944 and 1949, when England dealt with high debts and low inflation as well. Carney’s term doesn’t end until 2018. But futures markets don’t expect a rate rise before then.
They certainly didn’t get one yesterday
The BoE’s Monetary Policy Committee voted 9–0 to leave the main policy rate at 0.5%. That’s where it’s been since September 2009, which was more or less seven years ago.
Rates in the UK aren’t negative (yet). But with the Bank of Japan going negative last week, now it’s time to ask if the US Federal Reserve will follow. And then, after the Fed, is the next move for the BoE a rate cut? Is it just a matter of time before rates go negative here too? And before that time comes, are you prepared? Look for my interview on camera with Tim Price on this subject next week.
Category: Central Banks