acting-man.com / By Pater Tenebrarum / July 5, 2013
Rates to Linger Lower for Longer
Mark Carney chaired his first BoE MPC meeting on Thursday, and while no additional ‘QE’ was set into motion immediately, he promised that ultra-low rates would linger longer than hitherto assumed. That should bring a wave of malinvestment to the UK economy that can eventually be hailed as a great success, until the house of cards comes crashing down again. They didn’t say that, but it’s what is going to happen.
“Mark Carney signaled that the Bank of England will keep interest rates at a record low for longer than investors had expected as he used his first meeting as governor to give more insight into future policy.
The “implied rise in the expected future path of bank rate was not warranted by the recent developments in the domestic economy,” the BOE said in a statement in London after it left its benchmark interest rate and bond-purchase program unchanged.
Carney is the first foreigner to run the 319-year-old institution and today’s move pushes the BOE toward the policy guidance tool that he favors. It also signals that central bank will keep monetary policy accommodative as higher bond yields and volatility in markets threaten the U.K.’s economic recovery.
“They’ve already started guidance, in a less explicit way, with this statement,” said David Tinsley, economist at BNP Paribas in London and a former central bank official. “It leaves the door open to more asset purchases down the track.”
Thanks to BrotherJohnF