Bank of England governor Mark Carney: no plans to abolish cash - live updates

Discussion in 'Market News' started by Lily, Nov 24, 2015.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    Mark Carney is fielding questions on inflation, bank independence, and the global economy

    11.39am GMT

    Onto quantitative easing, and Carney explains that the Bank is committed to not cutting its stock of assets until interest rate have reached 2% (the point where they can be cut again).

    11.38am GMT

    Mark Garnier MP fears for young people who are trying to get onto the housing market.

    They face massive debts, as they ‘compensate’ older homeowners who have benefitted from the jump in house prices over the years.

    11.31am GMT

    Could Britain be facing a ‘perfect storm’, where new housebuyers are taking on huge debts and established homeowners are running down their savings, Garnier asks.

    Carney replies that consumer confidence is at its highest level since the crisis, and the Bank is watching closely in case problems are being stored up.

    11.29am GMT

    Should we be worried about a credit bubble in the UK, asks Mark Garnier MP?

    11.21am GMT

    Wes Streeting then asks: What are the macro-prudential implications of the government’s changes to tax credits?

    Carney: We always base our forecasts on decisions that have been taken. So I think we can wait another 24 hours [for the autumn statement to be delivered].

    11.14am GMT

    Wes Streeting MP moves onto Britain’s productivity puzzle -- will we ever recover our pre-crisis productivity rates?

    Carney says there is an ‘upside risk’ that productivity increases faster than the Bank expects.

    11.09am GMT

    Prof Kristin Forbes also sounds confident that the UK economy is recovering, and is unlikely to require negative interest rates:

    Kristin Forbes tells #tsc: "All in all, the evidence is of quite a tight labour market".

    11.06am GMT

    Carney then launches into a long explanation into the factors that are keeping borrowing costs at record lows worldwide.

    He cites demographic changes, and the impact of technology on the labour market which risks ‘hollowing out’ the jobs market.

    10.59am GMT

    Governor Carney tries to squash the debate -- perhaps fearing a panic on the streets if the public think their bank notes are to be pulped.

    He insists:

    There are no plans to abolish cash at the Bank of England.

    Carney: "There are no plans to abolish cash; as Mr Haldane just said, it's a thought experiment" [subtext: he's a very naughty boy]

    10.54am GMT

    Baker plays his trump card at Andy Haldane, asking if he knows economics professor Kevin Dowd.

    He taught me, Haldane replies.

    10.51am GMT

    Quote of day so far. Haldane on interest rates 'as best we can tell going back to Babylonian times we're in unchartered territory' #tsc

    10.47am GMT

    Steve Baker asks Andy Haldane about his recent claim that UK interest rates are the lowest they’ve ever been.

    Yes, Haldane replies, I was challenged about that so we went back and looked carefully.

    As far as we can tell, going back to Babylonian times, we’re in uncharted territory.

    10.39am GMT

    Steve Baker MP asks: why is UK inflation is so low (minus 0.1% today), and forecast to stay so low, even though the Bank is running a stimulative monetary policy?

    Carney blames the fall in oil prices, which was much steeper than expected.

    10.34am GMT

    Tyrie asks:

    Are you all saying that the next move in Bank policy might be to use the counter-cyclical tools controlled by the Financial Policy Committee, not a change in borrowing costs from the MPC?

    10.33am GMT

    Jacob Rees-Mogg now asks about the suggestion that global interest rates might need to be cut from their current record lows, into negative territory.

    Mark Carney agrees that the ‘equilibrium rate’ is lower than in the past.

    I don’t think the most likely scenario is that the equilibrium rate in the UK is negative, and that we need negative interest rates.

    Rees Mogg asks about Haldane's recent speech mooting negative rates. New boy Jan Vlieghe sees 'really big problems' with helicopter money.

    10.24am GMT

    The Bank has just published testimony from its chief economist, Andy Haldane.

    These countries benefitted from a large inflow of capital, and a build-up of debt, in the aftermath of the crisis. Those capital flows now appear to have gone into reverse, slowing growth.

    I expect this “third phase” of the crisis to be reasonably protracted in its impact on world growth. That is why, in my view, risks to the UK from the external environment are skewed to the downside, as they are in the Bank’s latest Inflation Report projections.

    Given the balance of risks, I have a neutral stance on the future direction of monetary policy. In my view, policy needs to be poised to move in either direction in the period ahead, depending on how the data and risks, domestic and international, play out.

    When rates do rise, I expect any rises to be both gradual and limited, in line with the Committee’s guidance.

    10.18am GMT

    Carney: @bankofengland could use monetary policy to ensure financial stability; but MPC is not 'first, or even second line of defence'.

    10.17am GMT

    Jacob Rees-Mogg MP asks whether there are tensions between the Bank’s monetary policy arm, and its macro-prudential arm. Are they working together, or obstructing each other’s goals?

    Excellent question, Carney replies. There have been more joint meetings between the Financial Policy Committee (responsible for financial stability) and the Monetary Policy Committee (responsible for inflation) to ensure each knows what the other is up to.

    Jacob Rees Mogg asks about MPC vs FPC contradictions; Carney @bankofengland: 'macroprudential policy is complementing monetary policy'

    It is possible that the MPC could take monetary action for ultimately financial stability reasons....

    If the view is that other macro-prudential tools are exhausted, we could use monetary policy to address macro-prudential issues.

    10.11am GMT

    So you’ve not got any examples of attempts to pressure the Bank and undermine independence, Andrew Tyrie asks.

    Carney confirms this is correct.

    Andrew Tyrie kicks off asking if Carney feels the Bank's independence is under pressure; Carney sounds relaxed.

    10.10am GMT

    10.09am GMT

    Committee chairman Andrew Tyrie promises us a couple of very interesting hours on monetary policy (hurrah).

    He starts by asking Mark Carney: is the Bank of England truly independent, or is there any ‘back seat driving’ from politicians?

    10.04am GMT

    And we’re off....

    10.03am GMT

    Alastair McCaig, market analyst at IG, hopes that Mark Carney will provide more insight into the current state of the UK economy.

    He doesn’t expect the governor will be bowled out by MPs:

    Mr Carney’s reputation for handling tricky questions is well founded and these verbal jousts invariably see the Canadian coming away with his reputation enhanced.

    10.01am GMT

    The session is being webcast live, here.

    9.59am GMT

    Hawk-spotting in Westminster this morning: Carney, Haldane et al up at Treasury select committee, talking about the Inflation Report.

    9.55am GMT

    Just five minutes to go until the UK parliament’s Treasury committee begin questioning the Bank of England about its latest quarterly inflation report.

    The witnesses in the Thatcher Room are:

    9.47am GMT

    The Moscow and Istanbul stock markets have both fallen sharply, after Turkey downed a Russian jet at the Syria border:

    “This episode just shows that the market is heavily underestimating geopolitical risks in the region.”

    Related: Russian fighter jet downed near Turkey-Syria border – live updates

    9.20am GMT

    German companies are increasingly confident, despite the problems stacking up at home and abroad.

    That’s according to IFO, the Munich-based thinktank, which just reported that the Paris attacks have not dampened business optimism in Germany.

    Ifo Business Climate Index for #Germany rises to 17-month high of 109.0 in November (consensus: 108.2)

    Summing up odd Ifo - neither Paris attacks nor VW nor emerging markets nor refugees having an impact on German business sentiment

    German #PMI (yesterday) & IFO (today) surveys for November beat expectations. Growth momentum looks safe thanks to a booming services sector

    9.08am GMT

    The Greek government spokesman has just condemned the early morning (3:30 AM) bomb attack on the offices of the country’s business federation, reports Helena Smith our correspondent in Athens.

    “The government denounces the bomb attack on the offices of SEV in Syntagma,” said Olga Gerovasiliou, adding that its “political stance” was one “of absolute condemnation of such actions.”

    “Such actions harm the image of the country and the real interests of Greeks. We call on the government to intensify its efforts to find and punish the perpetrators.”

    8.52am GMT

    Reports that the Turkish military have shot down a Russian-made plane near the Syria border are weighing on the markets:

    Related: Turkey shoots down jet near border with Syria

    Footage of the warplane downed by the Turkish airforce along #Syria border, allegedly a SU24

    Lira weakens further to trade at 2.8654 after Presidency says the downed plane is Russian Su-24 fencer

    8.50am GMT

    Airline stocks are leading the fallers on the FTSE 100, with easyJet losing 3.9% and IAG (British Airways’ parent company) down 3%.

    Hotel chains are also falling. Shares in Intercontinental Hotels are down 3.3% in London. And France’s Accor hotel chain has dropped by almost 5% on the Paris bourse.

    Paris suffers slump in Christmas bookings after attacks

    8.42am GMT

    European stock markets are all in the red this morning - with the main indices losing almost 1% in early trading.

    In London, the FTSE 100 is down 55 points, or 0.9%, at 6,250.

    It wasn’t the best morning for the DAX, which fell by 110 points soon after the bell.

    With Germany’s third quarter GDP confirmed at 0.3%, it was revealed the main drag on the country’s growth was its two-year low hitting net trade, with the increasing disparity between limp exports and surging imports lopping 0.4% off of the Q3 figure.

    8.30am GMT

    This chart from the FT highlights how German export have hit their lowest level since the last quarter of 2012.

    8.23am GMT

    Over in Greece, relief that Athens will get a €2bn bailout payment has been overshadowed by a bomb explosion near Syntagma Square, the site of the capital’s parliament.

    A device went off outside the offices of the Hellenic Business Federation around 3.30am local time. No-one was injured.

    8.05am GMT

    Here’s another worrying sign - German companies aren’t investing as much on new machinery and factories.

    Today’s GDP report shows that plant and equipment spending shrank by 0.8% in the last quarter.

    Germany ought to be in a recession, but isn't. Adjusting to permanently lower growth in China?

    7.58am GMT

    Analysts at Credit Suisse reckon Germany’s decade of export dominance could be over, as China’s economy slows:

    Nice Credit Suisse chart - Germany's decade of outperforming Eurozone growth is over.

    7.56am GMT

    Germany’s economy has being dragged back by its weakest trade performance in two years.

    “Of course, the refugee costs are playing a role here. These are the first effects on state spending.”

    7.36am GMT

    Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

    #UK economy today: CBI retail sales; BOE's Carney, Haldane, Vlieghe, Forbes speak in Parliament

    US Q3 GDP second reading to be the highlight of the day - TDS

    Our European opening calls: $FTSE 6288 down 18 $DAX 11071 down 21 $CAC 4872 down 17 $IBEX 10248 down 30 $MIB 22189 down 105

    Continue reading...

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