Mark Carney: Bank of England Governor criticises G20 over promises

Mark Carney has cautioned politicians against assuming that central banks can stimulate their economies through negative interest rates or more quantitative easing (Getty Images)

The Bank of England Governor Mark Carney has wrapped the knuckles of the leaders of the G20 for failing to deliver on their recent promises to boost growth.

At the Brisbane G20 summit in 2014 the leaders of the world’s 20 largest economies agreed to a raft of economic policies that were supposed to lift global GDP by at least 2 per cent in five years.

“Only 18 months on, the ‘2 in 5’ commitments are starting to look more like the 5/2 diet,” said Mr Carney, speaking at the annual Institute of International Finance G20 conference in Shanghai.

“Less than half the measures have been implemented and only around one-third of the promised impact on global GDP has been delivered.”

Mr Carney stressed that the global growth outlook had actually deteriorated sharply in recent years, making the need for such supply-side reforms even more urgent.

He cited the latest Bank of England forecast for global growth. This shows international GDP is 3 per cent below what the International Monetary Fund projected at the time of the Brisbane summit.

In his speech, Mr Carney cautioned politicians against assuming that central banks around the world can stimulate their economies through negative interest rates or more quantitative easing.

He said such policies merely served to bring demand forward from tomorrow, rather than generating sustainable growth. “Ultimately, monetary policy... must be reinforced by other policies.”

Mr Carney sounded a sceptical note about the desirability of negative interest rates, arguing that their main economic stimulus was through a lower exchange rate. “For the world as a whole, this export of excess saving and transfer of demand weakness elsewhere is ultimately a zero-sum game.”