Bank of England

Tuesday, February 11, 2020 - 12:04

MNI POLICY: BOE Haskel Says Still Prefers Rate Cut Now

By David Robinson

LONDON (MNI) - Bank of England Monetary Policy Committee member Jonathan Haskel said firms' increasing shift to intangible assets may be making it harder for them to supply collateral against loans, contributing to a lower equilibrium interest rate and supporting the case for monetary easing now to move away from the zero lower bound.

The problems firms face in borrowing push up risks spreads, and make them more vulnerable to changes in financial conditions, Haskel said in a speech at the University of Nottingham on

Haskel has recently voted for a 25 basis point rate cut, including at the January meeting.

The "low interest rate environment we find ourselves in, reinforced by the trend towards intangible assets that I have discussed today, in part informs my recent votes on the MPC, where limited conventional monetary policy space means I continue to prefer to move now in order to ensure we achieve a sustainable return of inflation to target," he said.

He said that the spread of intangibles may be playing a part in the common problem of central banks facing low inflation despite high employment.

"One angle is that intangible investments - directly through investment in process and indirectly through increased scalability - have brought about an increased scope for variable capacity utilisation and in so doing have flattened the short run relationship between aggregate demand and inflation," he said.

--MNI London Bureau; tel: +44 203-586-2223; email:

[TOPICS: M$B$$$,M$E$$$,M$$BE$]

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