BoE Governor Mark Carney Admits: Low rates may spark reckless borrowing, says he is ‘fully aware’ of the risks of the policy

Bilderberger George Osborne appointed Mark Carney (Freemason, Goldman Sachs, Bilderberger) to be governor of the Bank of England.

H/t reader squodgy:

“Classic Poacher turned Gamekeeper.

Can you believe this man?

As a senior cog in the Bank that co-ordinated, mastered and milked the sub-prime debacle of lending money to unworthy risk borrowers, then fed off the QE process, he is now telling the lenders (while interest rates are still rock bottom) that they are lending too much…..


Low rates may spark reckless borrowing, admits Carney: Bank chief says he is ‘fully aware’ of the risks of the policy:

  • Bank of England Governor Mark Carney was speaking last night in London
  • Called low interest rates – 0.5 per cent since 2009 – a ‘tremendous burden’

Ultra low interest rates could damage the economy by encouraging excessive household borrowing, Mark Carney admitted last night.

The Governor of the Bank of England also said he is ‘fully aware’ the policy is not without considerable risks, putting ‘a  tremendous burden’ on the Bank as it battles to restore the economy to health.

Speaking at the Mais Lecture in the Cass Business School in London, Mr Carney warned: ‘An environment of relatively low and predictable interest rates could encourage excessive risk taking in financial markets and by households.

‘The period of low and predictable interest rates before the financial crisis was in part to blame for the crisis.’

The Canadian, who succeeded Lord King as Governor in July last year, also said the almost exclusive focus by central banks on inflation in the past was ‘fatally flawed’.

He said that in the years leading up to the banking crisis ‘a healthy focus’ on inflation ‘became a dangerous distraction’ because it ignored threats to the financial system.

Mr Carney said the financial crisis was ‘a powerful reminder’ that low inflation ‘is not sufficient’ on its own to maintain a stable economy.

The Bank slashed interest rates to an all-time low of 0.5 per cent in March 2009 in a desperate effort to stop the recession turning into depression.

Five years of record low rates have spelt misery for Britain’s army of savers who have seen returns on their nest eggs plummet.

But it has been welcomed by borrowers whose mortgage costs have tumbled to record lows.

But with the economy recovering – Britain is among the fastest growing of the developed nations – speculation is mounting over when rates will start to rise.

Carney has hinted the first move could come early next year – possibly before the general election in May 2015 – but insisted they will not return to pre-crisis levels of 5 per cent for years to come.

He has suggested the monetary policy committee could raise rates to around 2 per cent to 2.5 per cent in the next three years.

Speaking last night, Mr Carney said: ‘As the MPC has signalled, a low for long interest rate environment will likely be with us for some time.

‘The MPC’s new guidance that any adjustments in rates, when they come, will be limited and gradual helps provide confidence to households and businesses that the MPC won’t take risks with the recovery.’

Inflation has fallen to 1.9 per cent – its lowest level since November 2009 – having been as high as 5.2 per cent in 2011 and above the 2 per cent target for much of the last five years.

The Governor said the Bank is now focused on inflation as well as the health of UK banks and the wider financial system.

He said tools to prevent banks lending recklessly and households borrowing too much can be used to keep the financial system safe.

Such tools, Mr Carney said, ‘may reduce the need for sharp or persistent moves in interest rates which might threaten financial stability’.

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