Market news
14.10.2019, 13:58

BoE's MPC member Cunliffe reiterates rates can move in either direction after no-deal Brexit

  • 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
  • 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 U.S. 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
  • When told by audience member that people did not believe BoE would ever raise rates after a no-deal Brexit, says people expectations aren't always right
  • Asked about negative BoE rates, said that they were be a very big shift to world as people know it
  • Says that the BoE has other tools that would be more effective than negative rates

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