Helicopter Money Would Put BOE Independence at Risk, Vlieghe Says By Bloomberg

Helicopter Money Would Put BOE Independence at Risk, Vlieghe Says By Bloomberg

(Bloomberg) — Tackling future recessions with helicopter money risks central bank independence and should be a final resort, Bank of England policy maker Gertjan Vlieghe warned.

Introducing such a policy of distributing money to the public becomes “quite a radical policy option” if the central bank also does not pay interest on reserves, he said at an event at Bloomberg’s London offices Monday.

“By mechanically keeping rates stuck at zero, the reserve expansion effectively suspends for a period both the instrument and the target of the central bank. Therefore, it effectively suspends for a period central bank operational independence,” Vlieghe said. “Central bank operational independence has served us extremely well in keeping inflation low and inflation expectations anchored.”

Vlieghe said “we should try everything else first.”

He also said that interest rates all over the world are likely to remain low for years to come.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link