Analysts at the Royal Bank of Scotland point out that a new Bank of England governor is for a new decade and while many of the challenges remain the same, low growth and low inflation, there’s a growing realisation that monetary policy cannot fix the problems the economy faces.
Key Quotes
“When the outgoing governor took up his role in 2013 Bank Rate was at 0.5%. Six and a half years later it’s a whopping 25bps higher at 0.75%, so little room to provide conventional monetary support.”
“The new governor could very quickly be debating the relative merits of a host of unconventional measures – more quantitative easing, negative interest rates, even ‘helicopter money’ (direct cash transfers to the government or households).”
“More widely he will be expected to participate in the climate change debate, and build on the work already underway at the Bank, including incorporating climate risks into bank stress tests.”
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