In response to Mark Carney’s remarks at a news conference in Nottingham, in which he said that the Bank would be prepared to tolerate a rise in inflation above 2%, Executive Director of Positive Money, Fran Boait said:

“In confronting the threat of rising inflation, the Bank is in a bind. By raising rates, it would risk provoking a stock market crash. With many people already struggling with debt repayments, even a small rise could prove unaffordable.

Keeping rates low may push down the exchange rate even further and risk further financial instability.

So we’re left in a situation where the heavy lifting is left to quantitative easing. But QE’s impact on inequality has made it politically toxic, and the Prime Minister has promised that her government will change course.

The Bank’s predicament is a product of an approach to monetary policy which has become dysfunctional. The Bank needs new tools which can boost demand directly in the real economy without the damaging side effects.”

 

About Positive Money

Positive Money campaigns for a fair, democratic and sustainable money system. Set up in the aftermath of the financial crisis, we are a not-for-profit company funded by small donors, charitable trusts and foundations.

Fran Boait, Executive Director of Positive Money is available for interviews. Please contact David Clarke at david.clarke@positivemoney.org.uk or 02072533235 / 07849598558 for more details.