Low-rate 'crutch' can hinder economy
Sunday 09 September 2012
Record low interest rates risk becoming a "long-term crutch" which hinders the repair of the UK economy, the Bank of England's chief economist has warned.
Spencer Dale's comments yesterday underlined the nervousness of the hawkish faction on the Bank's Monetary Policy Committee, which has held interest rates at 0.5 per cent since March 2009 and pumped £375bn into the recovery through quantitative easing.
Mr Dale argued, in a speech in Dublin, that drastic measures taken by rate-setters – as well as the lenders' relaxed stance – could be delaying the "rebalancing and restructuring that our economy needs", for example by allowing failing business to survive. "Monetary policy can and should provide short-term support in times of need, but it must avoid becoming a long-term crutch," he said.
Mr Dale said that if both supply and demand sides of the economy had been damaged by factors such as tight credit conditions, extra QE risked little more than fuelling inflation without boosting growth. "If your car's handbrake is stuck, putting your foot further down on the accelerator
won't get you very far before the car starts to overheat," he added.
- 1 Malaysian cyclist could face disciplinary action after 'Save Gaza' gloves protest
- 2 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 3 McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
- 4 Students offered grants if they tweet pro-Israeli propaganda
- 5 Satellite full of sexually experimental geckos adrift in space, Russia loses control of mission
Israel-Gaza conflict: Israeli targeting policy under scrutiny after shellfire hits a mother and child, a school full of refugees and a doctor’s home
Iraq crisis: Isis orders Mosul shop keepers to cover mannequins
Comic Con 2014 attendees
Students offered grants if they tweet pro-Israeli propaganda
McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...