‘Change has got to come’ on monetary policy, says Prime Minister

Exciting news! Prime Minister Theresa May said in her speech at the Conservative party conference that “change has got to come” on monetary policy.

While monetary policy with super low rates and quantitative easing have provided emergency medicine, we have to acknowledge some of the bad side effects. People with assets have got richer, while people without have not…

A change has got to come, and we are going to deliver it because that’s what a Conservative government can do.

We welcome Theresa May’s confirmation that QE has had harmful side effects which her government will seek to address. But she needs to clarify what she means, and what action she intends to take.

We want to see an end to QE in its current form as soon as possible. It has been a key driver of inequality, it is exacerbating the housing crisis and it has become ineffective at meeting its objective of stimulating demand.

Theresa May’s government should create the framework for alternative monetary policy tools which boost the economy without the negative side-effects.

We need a new relationship between monetary and fiscal policy. Instead of using new money to inflate asset prices, it should be channeled into the real economy via investment in infrastructure, housebuilding, or a cash payment to citizens.

It is in Theresa May’s power to create a fairer, more effective monetary policy without compromising the Bank of England’s independence. Her remarks on QE are welcome. She should now put them into action.

If you agree that UK monetary policies should benefit everyone in society, please sign the Positive Money petition here and share it far and wide.