Bank of england

The markets couldn’t care less whether Mark Carney stays or goes – and neither should we

A crash in the pound, with sterling trading down at $1.15, and heading to parity. A spike in gilts, and a flight by bond investors in a panic over the state of the British economy. As the headlines are dominated by reports that the Governor of the Bank of England might decide to pack his bags and return to his native Canada as early as next year, there has been lots of speculation about the havoc that might inflict on our already jittery post-Brexit economy. Right now, no one seems to know whether Mark Carney is likely to stay on as Governor beyond his initial five-year term or not. But

It’s time for Mark Carney to go

Oh dear. Mark Carney is irritated. His proud independence has been challenged. The Prime Minister had the temerity to admit that she was not altogether thrilled with his ‘super-low’ interest rates and quantitative easing. These policies meant that people with assets got richer, she pointed out. ‘People without them suffered… People with savings have found themselves poorer.’ Mr Carney found this intolerable and haughtily rebuffed her, saying, ‘The policies are done by technocrats. We are not going to take instruction on our policies from the political side.’ Back in your box, Mrs May. Carney’s in charge! As they clash, it is increasingly hard to remember what a bright day it

Have our thin-skinned times killed off satire for good?

Is satire dying? Zoe Williams asks in the Guardian whether the shrinking of permissible speech is killing comedy. To make her point, she wonders if the mid-1990s satire The Day Today would be tolerated in 2016 and whether ‘its surrealism belongs to another age’. The spoof news show, which in some ways seems slightly prophetic 20 years later, was sometimes edgy, and often surreal, and Williams recalls one scene in which a presenter announces in a dead pan manner that the Bank of England had issued ‘an emergency currency based on the Queen’s eggs, several thousand of which were removed from her ovaries in 1953 and held in reserve’. But, as she says: ‘If you told

Martin Vander Weyer

The Nissan test: can we really negotiate Brexit sector by sector?

I wrote last month that a key test of Brexit success will be whether Nissan is still making cars here in ten years’ time. A few days later, Nissan chief Carlos Ghosn issued a warning that ‘If I need to make an investment in the next few months and I can’t wait until the end of Brexit, then I have to make a deal with the UK government.’ The investment decision he referred to — expected by Christmas, which means before Brexit talks even begin — is whether to build the next Qashqai model at Sunderland or in France, to avoid tariffs on exports when we leave the single market.

Carney must go

Oh dear. Mark Carney is irritated. His proud independence has been challenged. The Prime Minister had the temerity to admit that she was not altogether thrilled with his ‘super-low’ interest rates and quantitative easing. These policies meant that people with assets got richer, she pointed out. ‘People without them suffered… People with savings have found themselves poorer.’ Mr Carney found this intolerable and haughtily rebuffed her, saying, ‘The policies are done by technocrats. We are not going to take instruction on our policies from the political side.’ Back in your box, Mrs May. Carney’s in charge! As they clash, it is increasingly hard to remember what a bright day it

Don’t listen to the doom-mongers: A rise in inflation isn’t some kind of crisis

It takes quite a determined Cassandra to see the rise in Consumer Prices Index (CPI) from 0.6 per cent in August to one per cent in September as some kind of crisis, not that that will stop the holdouts of the Remain campaign from trying to do so. When CPI fell below one per cent at the end of 2014, you might remember, there were dark warnings about the threat of deflation – with the horrors that would imply for borrowers, who would see the real value of their debts increase. Now, some are trying to present a rise to one per cent as bad news, with former Monetary Policy

Sending shockwaves around the world’s currency markets with Mark Carney

If only all my stories had as much impact. My interview with Mark Carney, the Governor of the Bank of England, sent shockwaves around the world’s currency markets. The Canadian was just three months into his new role as Britain’s most powerful unelected official when he visited Leeds to explain the central bank’s then new policy of forward guidance to a group of business leaders at the offices of one of the city’s Big Six law firms. In person, Carney was smooth, confident and assured, just as you would expect from someone who spent his formative years at Goldman Sachs. I had 10 minutes with the Governor, who was accompanied

The new world of work is a jungle but don’t call workers ‘animals’

The TUC general secretaryFrances O’Grady doesn’t get a lot of airtime. Compared with predecessors a generation ago, such as Vic Feather and Len Murray, she is all but invisible. But in her Congress speech at Brighton on Monday, she struck a note that must have resonated with many of the public who have no idea who she is when she spoke of ‘greedy businesses that treat workers like animals’. She was referring to zero-hours contracts, below-minimum-wage rates such as those effectively paid at Sports Direct’s Shirebrook warehouse, and rock-bottom fees per delivery offered to self-employed Hermes parcel-van drivers and Deliveroo fast-food couriers. And of course anyone not fundamentally opposed to

Mark Carney has a shot at redemption tomorrow. Will he take it?

There are not many predictions that are safe to make in the financial markets. M&S’s results will always be disappointing is perhaps one. Sir Philip Green will never apologise for anything is another. And there is one more that can now be added to the list. The Bank of England won’t raise interest rates when it meets this week. But it should. Why? Because the ‘emergency’ post-Brexit cut is already looking like an over-reaction. In truth, the Bank’s Governor Mark Carney is already looking dangerously over-committed to Project Remain. The best thing the Bank could do now would be to admit that it had a made a mistake – and

From paper to the £5 polymer: the origins of the banknote

Kublai Khan, said Marco Polo, had ‘a more extensive command of treasure than any other sovereign in the universe’. There were no jangling pockets of coins in Kanbalu. Bark had been stripped from the mulberry trees and beaten into paper notes. The notes carried delicate little pictures of earlier currency — long, frayed ropes weighed down with coins. It was as though they were mocking the old ways. Paper money had been produced in China from as early as the 7th century, but that did not stop Marco Polo from gushing that the Great Khan had discovered ‘the secret of the alchemists’. Back home, there was much curiosity but apparently

The Brexit bounce

Next time it comes to redesigning the PPE course at Oxford, I suggest a module beginning with a quotation from George Osborne. It’s something he said to the Treasury Select Committee in May, back when he was still Chancellor: ‘If you look at the sheer weight of opinion, it is overwhelmingly the case that people who look at the case for leaving the EU come to the conclusion it would make the country poorer, and it would make the individuals in the country poorer, too.’ There might be advantages to Brexit, he said, ‘but let’s not pretend we’d be economically better off’. In other words: it wasn’t just George Osborne’s

‘Serene’ Mark Carney tries to take credit for Brexit bounceback

How does Mark Carney feel about his ‘Project Fear’ warnings in the run-up to the referendum? His mild-mannered nemesis Jacob Rees-Mogg probably wouldn’t have been prepared for the Bank of England Governor’s choice of words to describe his mood. Carney was ‘serene’ about how he handled himself before Brexit, he told the Treasury Select Committee this afternoon. But Carney didn’t stop there: he also did his best to bait Rees-Mogg, who has clashed with Carney several times before at these hearings, suggesting the session was being wasted ‘going through counterfactuals’. He then went on to slap down any suggestion from the Tory MP that his warnings had been ‘dire’. Yet

The Bank of Wonderland

What should we think about negative interest rates? What kind of Alice in Wonderland world are we living in when companies and households are paid to borrow and charged if they save? Seemingly crazy, negative interest rates are spreading nonetheless. Implemented by central banks in Europe, Japan and elsewhere, they now apply in countries accounting for a quarter of the global economy. Should we be worried? Could we see negative rates in Britain? Earlier this month, the Bank of England cut interest rates for the first time in seven years, from 0.5 per cent to a new record low of 0.25 per cent. Quantitative easing was also restarted, with the

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.

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

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

‘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

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

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