Mark Carney discusses the possibility of an interest rate cut to the Treasury Select CommitteeMake Text Bigger
Mark Carney, Governor of the Bank of England, was today speaking at a Treasury Select Committee hearing. He indicated that interest rates were more than likely not to rise in the medium term and that if the economy needed further stimulation the Bank could consider a further drop in rates towards zero, but ruled out a negative rate.
Mr Carney said, “we are not on a preset course and of course if risks were to materialise and the global situation were to intensify to the downside, that would have implications for the path of policy.”
On future rates and levels of quantitative easing he added “We could cut interest rates towards zero. We could engage in additional asset purchases, including a variety of assets. We could also provide a perspective where we could adjust our policy horizon. We could shorten our policy horizon over which we wanted to return inflation to target.”
On ruling out negative interest rates Mr Carney said, “We have no intention, no interest in negative interest rates. We have other options and would take very seriously the impact of negative interest rates on financial services and building societies especially.”
Although a drop in interest rates may be advantageous to some borrowers the negative implications for the UK’s economic outlook would far outweigh any benefit.
Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.