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Mark Carney: central banks not to blame for rising inequality Mark Carney: central banks not to blame for rising inequality
(35 minutes later)
3.40pm GMT
15:40
Here are Obama and Alexis Tsipras, courtesy of the White House, with the US president saying he would continue to urge Greece’s creditors to take the steps needed to put the country on the path to a durable economic recovery:
"Kalispera." Watch @POTUS speak alongside PM @tsipras_eu in Athens—his first stop on his final planned foreign trip: https://t.co/BDXY7VdZmH
3.11pm GMT3.11pm GMT
15:1115:11
US markets off to a mixed startUS markets off to a mixed start
After six straight days of rises, the Dow Jones Industrial Average is pausing for breathe.After six straight days of rises, the Dow Jones Industrial Average is pausing for breathe.
It is currently down 26 points or 0.15%, but the S&P 500 and Nasdaq both moved higher at the open.It is currently down 26 points or 0.15%, but the S&P 500 and Nasdaq both moved higher at the open.
3.09pm GMT3.09pm GMT
15:0915:09
More from Obama on debt relief for Greece:More from Obama on debt relief for Greece:
#Obama: it is important to combine reforms, cuts with growth agenda #Greece#Obama: it is important to combine reforms, cuts with growth agenda #Greece
#Obama: you need a growth agenda, difficult without debt relief mechanism #Greece#Obama: you need a growth agenda, difficult without debt relief mechanism #Greece
And on Donald Trump’s election victory:And on Donald Trump’s election victory:
"Elex always turn on personalities .. turn on natural desire for change if incumbant has been there for 8 years," says #Obama in #Athens"Elex always turn on personalities .. turn on natural desire for change if incumbant has been there for 8 years," says #Obama in #Athens
Greek prime minister Alexis Tsipras says he is hopeful Germany will back debt relief (which may be an heroic assessment):Greek prime minister Alexis Tsipras says he is hopeful Germany will back debt relief (which may be an heroic assessment):
Tsipras says he is *optimistic* that Merkel will be convinced (by @POTUS !) to provide substantive debt relief to Greece. #obama_athensTsipras says he is *optimistic* that Merkel will be convinced (by @POTUS !) to provide substantive debt relief to Greece. #obama_athens
2.49pm GMT2.49pm GMT
14:4914:49
And here are Obama’s comments. Helena reports:And here are Obama’s comments. Helena reports:
“I have always wanted to come to Greece ... I think we all know that the world owes an enormous debt to Greece and the Greek people,” Obama also told reporters.“I have always wanted to come to Greece ... I think we all know that the world owes an enormous debt to Greece and the Greek people,” Obama also told reporters.
“The ideas of ancient Greeks helped inspire our founding fathers ….to this day the United States is profoundly grateful to our Greek friends.“The ideas of ancient Greeks helped inspire our founding fathers ….to this day the United States is profoundly grateful to our Greek friends.
“I know this has been a painful and difficult time … this crisis is not an abstraction but has a very concrete and devastating impact on people in this country.”“I know this has been a painful and difficult time … this crisis is not an abstraction but has a very concrete and devastating impact on people in this country.”
It was, he said, now very important that “Greeks see improvements in their daily lives.”It was, he said, now very important that “Greeks see improvements in their daily lives.”
2.44pm GMT2.44pm GMT
14:4414:44
Obama backs debt relief for GreeceObama backs debt relief for Greece
Helena SmithHelena Smith
Back to Greece again, where the US president has begun his farewell tour of Europe. Our correspondent Helena Smith reports:Back to Greece again, where the US president has begun his farewell tour of Europe. Our correspondent Helena Smith reports:
Barack Obama may be visiting Athens at the end of his time in office but the outgoing US leader has not disappointed. Barely three hours after he touched down in a Greek capital rendered almost unrecognizable by draconian security, Obama said the three words Greek officials have wanted the world leader to utter: debt, austerity and solidarity. “I will continue to underline that austerity alone cannot deliver prosperity,” he told the Greek prime minister Alexis Tsipras after being greeted by the debt-stricken country’s head of state and the rousing tones of a military honour band. “Debt relief is needed.”Barack Obama may be visiting Athens at the end of his time in office but the outgoing US leader has not disappointed. Barely three hours after he touched down in a Greek capital rendered almost unrecognizable by draconian security, Obama said the three words Greek officials have wanted the world leader to utter: debt, austerity and solidarity. “I will continue to underline that austerity alone cannot deliver prosperity,” he told the Greek prime minister Alexis Tsipras after being greeted by the debt-stricken country’s head of state and the rousing tones of a military honour band. “Debt relief is needed.”
Earlier he had said: “Greece has gone through very challenging and dramatic times over the last several years. We are glad to see that progress is being made, although we recognise that there are significant challenges ahead, and we intend to stand shoulder to shoulder with the Greek people throughout this process. “Earlier he had said: “Greece has gone through very challenging and dramatic times over the last several years. We are glad to see that progress is being made, although we recognise that there are significant challenges ahead, and we intend to stand shoulder to shoulder with the Greek people throughout this process. “
Athens’ leftist led government has made little secret that it hopes the US president’s open display of support will resonate with Germany and other partners in Europe which have footed the bill of the nation’s massive bailouts but demanded punishing belt-tightening in return. “We consider this visit will contribute to the effort to reduce Greece’s debt, its spokesman said ahead of the leader’s arrival. “The US president has repeatedly stated he wants to solve this huge issue before he leaves office.”Athens’ leftist led government has made little secret that it hopes the US president’s open display of support will resonate with Germany and other partners in Europe which have footed the bill of the nation’s massive bailouts but demanded punishing belt-tightening in return. “We consider this visit will contribute to the effort to reduce Greece’s debt, its spokesman said ahead of the leader’s arrival. “The US president has repeatedly stated he wants to solve this huge issue before he leaves office.”
Obama, only the fourth American leader to visit the country since its foundation nearly 200 years ago, heads to Berlin once his 29-hour sojourn in Athens ends on Wednesday.Obama, only the fourth American leader to visit the country since its foundation nearly 200 years ago, heads to Berlin once his 29-hour sojourn in Athens ends on Wednesday.
Tsipras is pushing EU partners to agree to a debt deal by the end of the year. At around €330bn, or 180 percent of GDP, Greece’s debt pile is not only regarded as unsustainable but perhaps the biggest impediment to its economic recovery.Tsipras is pushing EU partners to agree to a debt deal by the end of the year. At around €330bn, or 180 percent of GDP, Greece’s debt pile is not only regarded as unsustainable but perhaps the biggest impediment to its economic recovery.
Without the load being partially forgiven, Tsipras’ Syriza-dominated government says it will be high-nigh impossible to get out of the death spiral in which the recession-ravaged economy now finds itself.Without the load being partially forgiven, Tsipras’ Syriza-dominated government says it will be high-nigh impossible to get out of the death spiral in which the recession-ravaged economy now finds itself.
Obama, who also spoke of the importance of reforms in making the Greek economy more competitive, emphasized the significance of a “strong, prosperous and unified Europe … not just for the people of Europe but for the whole world and the US.”Obama, who also spoke of the importance of reforms in making the Greek economy more competitive, emphasized the significance of a “strong, prosperous and unified Europe … not just for the people of Europe but for the whole world and the US.”
This is the first time a sitting US president has elected to visit Greece on its own. On previous occasions Turkey has also been included in the tour. But Obama, who is accompanied by his Secretary of Treasury Jack Lew and Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland, is believed to have wanted to make the trip for a long time. “It was a personal choice,” said the defense minister Panos Kammenos speaking to a local radio station after welcoming the leader at Athens’ international airport. The symbolism of Athens being the birthplace of democracy also played a significant role for a president now determined to allay the fears of European leaders following the election of his successor Donald Trump last week.This is the first time a sitting US president has elected to visit Greece on its own. On previous occasions Turkey has also been included in the tour. But Obama, who is accompanied by his Secretary of Treasury Jack Lew and Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland, is believed to have wanted to make the trip for a long time. “It was a personal choice,” said the defense minister Panos Kammenos speaking to a local radio station after welcoming the leader at Athens’ international airport. The symbolism of Athens being the birthplace of democracy also played a significant role for a president now determined to allay the fears of European leaders following the election of his successor Donald Trump last week.
At a press conference following 90-minute talks with Obama, the Greek prime minister said it was vital that Greeks began to feel the effects of the sacrifices they have made in recent years.At a press conference following 90-minute talks with Obama, the Greek prime minister said it was vital that Greeks began to feel the effects of the sacrifices they have made in recent years.
“After seven years the Greek people cannot bear any more austerity,” he told reporters. “Greece deserves debt relief and the time is now. President Obama and I discussed a number of issues specifically the important potential of investment in Greece and the future of Greece with its shipping power becoming an important centre for trade, transport and energy.”“After seven years the Greek people cannot bear any more austerity,” he told reporters. “Greece deserves debt relief and the time is now. President Obama and I discussed a number of issues specifically the important potential of investment in Greece and the future of Greece with its shipping power becoming an important centre for trade, transport and energy.”
UpdatedUpdated
at 3.00pm GMTat 3.00pm GMT
2.41pm GMT2.41pm GMT
14:4114:41
But the signs of US economic strength question the need for any fiscal stimulus, says Dr Harm Bandholz, chief US economist at UniCredit Research:But the signs of US economic strength question the need for any fiscal stimulus, says Dr Harm Bandholz, chief US economist at UniCredit Research:
The consumption strength (and the related good performance of the US economy in the second half of 2016) has important policy implications.The consumption strength (and the related good performance of the US economy in the second half of 2016) has important policy implications.
First, and most straightforward, it allows the Fed to stay on course for a rate hike at the upcoming meeting in mid-December.First, and most straightforward, it allows the Fed to stay on course for a rate hike at the upcoming meeting in mid-December.
Second, and probably more controversial, it really questions the need for a massive fiscal stimulus at this point. After all, the idea of such a stimulus is to temporarily support the economy during downturns. There is a growing literature showing that fiscal multipliers are much smaller when the economy is close to potential or full employment. That means that one gets less bang for the buck. Moreover, as highlighted already by Milton Friedman, poorly timed policies add instability to the economy, potentially exacerbating rather than damping business cycles. They initially may cause overheating and higher inflation, and then a deeper recession.Second, and probably more controversial, it really questions the need for a massive fiscal stimulus at this point. After all, the idea of such a stimulus is to temporarily support the economy during downturns. There is a growing literature showing that fiscal multipliers are much smaller when the economy is close to potential or full employment. That means that one gets less bang for the buck. Moreover, as highlighted already by Milton Friedman, poorly timed policies add instability to the economy, potentially exacerbating rather than damping business cycles. They initially may cause overheating and higher inflation, and then a deeper recession.
2.36pm GMT2.36pm GMT
14:3614:36
The strong US retail sales figures have only added to the expectation that the US Federal Reserve will raise interest rates in December. Rob Carnell, chief international economist at ING Bank, said a hike next month was almost in the bag:The strong US retail sales figures have only added to the expectation that the US Federal Reserve will raise interest rates in December. Rob Carnell, chief international economist at ING Bank, said a hike next month was almost in the bag:
Strong US retail sales, and an expectation of further gains in inflation (due out on November 17) make the 92% market probability for a 14 December Fed rate hike look about right (nothing is 100% until it is done).Strong US retail sales, and an expectation of further gains in inflation (due out on November 17) make the 92% market probability for a 14 December Fed rate hike look about right (nothing is 100% until it is done).
Not only were headline retail sales figures strong at +0.8% month on month, but there were strong core figures (control group which strips out the more volatile items also rose 0.8% month on month). The figures were stronger than the consensus expected (+0.6% month on month), and stronger still when upwards revisions to the previous months’ data are taken into account.Not only were headline retail sales figures strong at +0.8% month on month, but there were strong core figures (control group which strips out the more volatile items also rose 0.8% month on month). The figures were stronger than the consensus expected (+0.6% month on month), and stronger still when upwards revisions to the previous months’ data are taken into account.
The strength in sales was also matched with its breadth and only a few sub-categories registered month on month declines (furniture (-0.9% month on month, dept stores -0.7% month on month, and eating/drinking -0.7% month on month).The strength in sales was also matched with its breadth and only a few sub-categories registered month on month declines (furniture (-0.9% month on month, dept stores -0.7% month on month, and eating/drinking -0.7% month on month).
While a December hike looks as close to a done deal as one ever gets in markets, there are still questions about 2017 Fed policy. Markets are currently optimistic about Trump’s fiscal expansion in the US next year, and downplaying risks of a more deflationary protectionist policy mix. This might be right. That said, it places most of the risk on the downside, should expansion take longer to materialise than expected, or protectionism rear up more strongly than anticipated.While a December hike looks as close to a done deal as one ever gets in markets, there are still questions about 2017 Fed policy. Markets are currently optimistic about Trump’s fiscal expansion in the US next year, and downplaying risks of a more deflationary protectionist policy mix. This might be right. That said, it places most of the risk on the downside, should expansion take longer to materialise than expected, or protectionism rear up more strongly than anticipated.
2.21pm GMT2.21pm GMT
14:2114:21
US retail sales stronger than expectedUS retail sales stronger than expected
While Mark Carney was delighting MPs by doling out party invitations, the US released better than forecast retail sales figures for October.While Mark Carney was delighting MPs by doling out party invitations, the US released better than forecast retail sales figures for October.
According to the Commerce Department, retail sales rose 0.8% last month compared to September, with a particularly strong performance from the car industry. On top of that, building materials were also in demand, perhaps due to households hit by Hurricane Matthew having to rebuild and repair damage. The year on year rise was 4.3%.According to the Commerce Department, retail sales rose 0.8% last month compared to September, with a particularly strong performance from the car industry. On top of that, building materials were also in demand, perhaps due to households hit by Hurricane Matthew having to rebuild and repair damage. The year on year rise was 4.3%.
Analysts had forecast a month on month rise of 0.6% in October. Meanwhile September’s figure was revised upwards from 0.6% to 1%. The combined gain in September and October was the biggest two month gain since early 2014.Analysts had forecast a month on month rise of 0.6% in October. Meanwhile September’s figure was revised upwards from 0.6% to 1%. The combined gain in September and October was the biggest two month gain since early 2014.
2.16pm GMT2.16pm GMT
14:1614:16
Summary: Carney defends central banks as storm loomsSummary: Carney defends central banks as storm looms
Mark Carney was on rather jolly form as he faced MPs today, perhaps happy that the issue of his term length was finally resolved last month. But what did we actually learn?Mark Carney was on rather jolly form as he faced MPs today, perhaps happy that the issue of his term length was finally resolved last month. But what did we actually learn?
1) Central Banks are fighting their corner, as TrumpWorld approaches.1) Central Banks are fighting their corner, as TrumpWorld approaches.
Carney was repeatedly adamant that central bankers aren’t responsible for the income inequality and low growth that has helped to drive Donald Trump to power, and also helped to cause Brexit.Carney was repeatedly adamant that central bankers aren’t responsible for the income inequality and low growth that has helped to drive Donald Trump to power, and also helped to cause Brexit.
He insisted that broader issues are in play, and only politicians can fight them, saying:He insisted that broader issues are in play, and only politicians can fight them, saying:
I think it is very important to distinguish between the stance of monetary policy and the reasons why global interest rates are low, the reasons why inequality have increased across major economies.I think it is very important to distinguish between the stance of monetary policy and the reasons why global interest rates are low, the reasons why inequality have increased across major economies.
The last two are caused by much more fundamental factors and an excessive focus on monetary policy in many respects is a massive blame deflection exercise.The last two are caused by much more fundamental factors and an excessive focus on monetary policy in many respects is a massive blame deflection exercise.
Donald Trump argues that his tax cuts and infrastructure spending plans will actually have an effect here, creating the conditions for higher growth and borrowing costs.Donald Trump argues that his tax cuts and infrastructure spending plans will actually have an effect here, creating the conditions for higher growth and borrowing costs.
Carney may be offer his US counterpart, Janet Yellen, a lifeline -- given Trump’s warning that he won’t offer her a second term at the Fed.Carney may be offer his US counterpart, Janet Yellen, a lifeline -- given Trump’s warning that he won’t offer her a second term at the Fed.
Central bank independence looks shaky; Carney is reminding us that central bankers have been clearing up quite a mess since 2008.Central bank independence looks shaky; Carney is reminding us that central bankers have been clearing up quite a mess since 2008.
2) Carney won’t be swayed to stay longer2) Carney won’t be swayed to stay longer
We can safely assume now that governor will flying back to Canada in July 2019 to be reunited with his family.We can safely assume now that governor will flying back to Canada in July 2019 to be reunited with his family.
Even if Brexit turns into a dogs dinner, and isn’t finished by March 2019, Carney won’t do more than the extra 12 months he signed up for.Even if Brexit turns into a dogs dinner, and isn’t finished by March 2019, Carney won’t do more than the extra 12 months he signed up for.
There is a practical reality, which is I’ll be separated from my family for that extra period of extension so there are limits, reasonable limits to what that would be.There is a practical reality, which is I’ll be separated from my family for that extra period of extension so there are limits, reasonable limits to what that would be.
I will leave June 30th 2019.I will leave June 30th 2019.
3) Don’t get used to falling inflation3) Don’t get used to falling inflation
Carney was reminded that inflation surprisingly fell this morning, to 0.9%. His message -- don’t expect prices to remain low in 2017, given the pound’s weakness.Carney was reminded that inflation surprisingly fell this morning, to 0.9%. His message -- don’t expect prices to remain low in 2017, given the pound’s weakness.
Inflation is going up.Inflation is going up.
The pass through from a 20 percent fall in the trade weighted level of sterling is going to come,it’s going to build towards the end of this year into 2017 and in our expectation, be above 2 percent by the middle of 2017 and stay there for a while because of that pass through.The pass through from a 20 percent fall in the trade weighted level of sterling is going to come,it’s going to build towards the end of this year into 2017 and in our expectation, be above 2 percent by the middle of 2017 and stay there for a while because of that pass through.
4) Businesses are getting the Brexit jitters4) Businesses are getting the Brexit jitters
A Bank survey has found that 45% of Uk firms have seen their investment plans affected by Brexit; half of those companies have put spending plans on ice.A Bank survey has found that 45% of Uk firms have seen their investment plans affected by Brexit; half of those companies have put spending plans on ice.
And Carney also predicted that financial firms could start triggering their contingency plans when there is 18 months to go until Brexit, if they don’t like the look of the new deal.And Carney also predicted that financial firms could start triggering their contingency plans when there is 18 months to go until Brexit, if they don’t like the look of the new deal.
He said:He said:
If the time to exit is measured in 18 months or less and the degree of exit is viewed as considerable then a number of those firms would take decisions, that’s the best guidance I can give.If the time to exit is measured in 18 months or less and the degree of exit is viewed as considerable then a number of those firms would take decisions, that’s the best guidance I can give.
5) The Bank of England’s Christmas Party will be a cracker5) The Bank of England’s Christmas Party will be a cracker
Jacob Rees-Mogg MP has pushed for Mark Carney to get the sack, so it’s nice to see that the two men have made up.Jacob Rees-Mogg MP has pushed for Mark Carney to get the sack, so it’s nice to see that the two men have made up.
The governor has invited one of his sternest critics to the Bank’s swanky Christmas bash, along with the rest of the committee too (chairman Andrew Tyrie is planning to drag along a few officials too, so the Bank had better lay on extra nibbles).The governor has invited one of his sternest critics to the Bank’s swanky Christmas bash, along with the rest of the committee too (chairman Andrew Tyrie is planning to drag along a few officials too, so the Bank had better lay on extra nibbles).
1.39pm GMT1.39pm GMT
13:3913:39
Mark Carney ends the meeting by returning to his theme that there is a “blame exercise” underway, with central banks being labelled as the only cause of problems in the economy today.Mark Carney ends the meeting by returning to his theme that there is a “blame exercise” underway, with central banks being labelled as the only cause of problems in the economy today.
He says that only politicians can really tackle inequality - his job is to help create economic stability and stable inflation.He says that only politicians can really tackle inequality - his job is to help create economic stability and stable inflation.
We’re going to have to run exeptionally loose monetary policyWe’re going to have to run exeptionally loose monetary policy
We are going to continually make clear that we can’t make the structural changes that will drive productivity.We are going to continually make clear that we can’t make the structural changes that will drive productivity.
But he agrees it would be absolutely welcome to raise interest rates, when appropriate:But he agrees it would be absolutely welcome to raise interest rates, when appropriate:
*CARNEY: IT WOULD BE WELCOME TO RAISE INTEREST RATES*CARNEY: IT WOULD BE WELCOME TO RAISE INTEREST RATES
1.33pm GMT1.33pm GMT
13:3313:33
Carney: We shouldn't tighten policy nowCarney: We shouldn't tighten policy now
And finally, Steve Baker tries to get himself swiftly dis-invited from the Bank of England Christmas party, by asking:And finally, Steve Baker tries to get himself swiftly dis-invited from the Bank of England Christmas party, by asking:
Q: Have you lost the plot?Q: Have you lost the plot?
MPC member Ian McCafferty denies it -- the bank acted on the best data possible after the Brexit vote, and have been responding to events first.MPC member Ian McCafferty denies it -- the bank acted on the best data possible after the Brexit vote, and have been responding to events first.
Baker clarifies that he’s actually quoting William Hague (former foreign secretary), who recently claimed that central bankers were pumping up a new bubble and keeping rates too low.Baker clarifies that he’s actually quoting William Hague (former foreign secretary), who recently claimed that central bankers were pumping up a new bubble and keeping rates too low.
Q: You have explained that unemployment would be higher if interest rates rise, so aren’t you making “highly political decisions”?Q: You have explained that unemployment would be higher if interest rates rise, so aren’t you making “highly political decisions”?
No, Carney insists. We’re following our mandate (to maintain inflation around 2% in the medium term).No, Carney insists. We’re following our mandate (to maintain inflation around 2% in the medium term).
And he then suggests that there’s a dangerous theory that central bankers should thrown down a challenge to elected leaders:And he then suggests that there’s a dangerous theory that central bankers should thrown down a challenge to elected leaders:
I do not accept the line of thought that central banks should not focus on their remit. They should tighten policy in order to force governments to take tough decisions.I do not accept the line of thought that central banks should not focus on their remit. They should tighten policy in order to force governments to take tough decisions.
That’s straying from the mandate. That’s political.That’s straying from the mandate. That’s political.
Q: Won’t there be a huge crash when rates rise, having been left low for so long?Q: Won’t there be a huge crash when rates rise, having been left low for so long?
Deputy governor Minouche Shafik argues that the Bank doesn’t set the interest rate that the UK economy needs.Deputy governor Minouche Shafik argues that the Bank doesn’t set the interest rate that the UK economy needs.
And there would be “very big economic costs” to pay if rates were raised now.And there would be “very big economic costs” to pay if rates were raised now.
1.18pm GMT1.18pm GMT
13:1813:18
Rees-Mogg asks whether the Bank’s latest (more optimistic) economic forecasts will affect economic growth, in the same way that Mark Carney’s statement immediately after the Brexit vote helped shore up confidence (in the bank’s view, anyway)Rees-Mogg asks whether the Bank’s latest (more optimistic) economic forecasts will affect economic growth, in the same way that Mark Carney’s statement immediately after the Brexit vote helped shore up confidence (in the bank’s view, anyway)
Tiptoeing carefully, Carney suggests that forecast changes don’t have as much impact on consumers as actual interest rate changes (or commitments to act).Tiptoeing carefully, Carney suggests that forecast changes don’t have as much impact on consumers as actual interest rate changes (or commitments to act).
Q: But if your forecasts are wrong, and are revised, that’s a problem?Q: But if your forecasts are wrong, and are revised, that’s a problem?
Carney suggests that all forecasts are revised.Carney suggests that all forecasts are revised.
Q: Yes, but it’s hard to spot which part of the August forecast was right [the BoE slashed its 2017 growth forecast, and then revised it much higher in November].Q: Yes, but it’s hard to spot which part of the August forecast was right [the BoE slashed its 2017 growth forecast, and then revised it much higher in November].
Carney tries to stick to the big picture, saying that Britain is suffering a “slow motion slowdown” since the Brexit vote, not a sharp adjustment.Carney tries to stick to the big picture, saying that Britain is suffering a “slow motion slowdown” since the Brexit vote, not a sharp adjustment.
Q: So should you watch out for groupthink in future?Q: So should you watch out for groupthink in future?
Carney says that the BoE’s forecasts were too pessimistic about consumer spending; people did not react badly to the Brexit vote. The lesson learned is around the ‘big turning point’, he says.Carney says that the BoE’s forecasts were too pessimistic about consumer spending; people did not react badly to the Brexit vote. The lesson learned is around the ‘big turning point’, he says.
1.07pm GMT1.07pm GMT
13:0713:07
High jinks likely at the Bank of England Christmas partyHigh jinks likely at the Bank of England Christmas party
Finally, Jacob Rees-Mogg gets to question the Bank of England.Finally, Jacob Rees-Mogg gets to question the Bank of England.
Rees-Mogg is one of Mark Carney’s toughest critics, and recently suggested the governor should resign for his comments before the Brexit vote.Rees-Mogg is one of Mark Carney’s toughest critics, and recently suggested the governor should resign for his comments before the Brexit vote.
Everyone leans forward to hear what zingers Rees-Mogg will send down,....Everyone leans forward to hear what zingers Rees-Mogg will send down,....
Q: I must start by thanking you, governor, for inviting me to the Bank of England Christmas Party, it’s very gracious, so thank you very much.Q: I must start by thanking you, governor, for inviting me to the Bank of England Christmas Party, it’s very gracious, so thank you very much.
Well, it is the season, grins Carney.Well, it is the season, grins Carney.
Immediately, Steve Baker MP catches the governor’s eye - perhaps keen on some canapés and champers - and Carney finds himself inviting the whole committee along!Immediately, Steve Baker MP catches the governor’s eye - perhaps keen on some canapés and champers - and Carney finds himself inviting the whole committee along!
BREAKING: Mark Carney has invited arch nemesis Jacob Rees-Mogg to the Bank of England's Xmas partyBREAKING: Mark Carney has invited arch nemesis Jacob Rees-Mogg to the Bank of England's Xmas party
UpdatedUpdated
at 1.24pm GMTat 1.24pm GMT
12.54pm GMT12.54pm GMT
12:5412:54
Mark Carney has challenged politicians to implement ‘major’ structural economic reforms.Mark Carney has challenged politicians to implement ‘major’ structural economic reforms.
Otherwise, we could be stuck with low interest rates for decades.Otherwise, we could be stuck with low interest rates for decades.
*CARNEY: LOW-RATE TRAP MAY PERSIST DECADES UNLESS MAJOR REFORMS*CARNEY: LOW-RATE TRAP MAY PERSIST DECADES UNLESS MAJOR REFORMS
BOE Gov #Carney: monetary policy is not "loose"; global equilibrium interest rates low & could be "trapped" here for decades without reformsBOE Gov #Carney: monetary policy is not "loose"; global equilibrium interest rates low & could be "trapped" here for decades without reforms
12.48pm GMT12.48pm GMT
12:4812:48
Mark Carney says that only 4% of companies with a pension deficit say that current low interest rates are causing a problem.Mark Carney says that only 4% of companies with a pension deficit say that current low interest rates are causing a problem.
Q: But you at the Bank of England have just boosted the contributions into your own final salary scheme, says Helen Goodman.Q: But you at the Bank of England have just boosted the contributions into your own final salary scheme, says Helen Goodman.
Carney doesn’t like this very much - he says “total compensation” has been level-pegging with the public sector.Carney doesn’t like this very much - he says “total compensation” has been level-pegging with the public sector.
12.40pm GMT12.40pm GMT
12:4012:40
Back in parliament, Helen Goodman MP challenges the Bank of England over its QE scheme.Back in parliament, Helen Goodman MP challenges the Bank of England over its QE scheme.
Q: By pushing down bond yields, you’ve damaged defined benefit pension schemes and forced them to put more money to cover deficits,Q: By pushing down bond yields, you’ve damaged defined benefit pension schemes and forced them to put more money to cover deficits,
Minouche Shafik says this only affects schemes that are already in deficit, and most private sector firms have moved away from offering these final salary schemes.Minouche Shafik says this only affects schemes that are already in deficit, and most private sector firms have moved away from offering these final salary schemes.
Goodman shoots back that firms aren’t stopping these schemes because people don’t like the security of final salary pension. They’re stopping them because they’re too expensive in the current financial environment.Goodman shoots back that firms aren’t stopping these schemes because people don’t like the security of final salary pension. They’re stopping them because they’re too expensive in the current financial environment.
And because people are living longer, Shafik replies.And because people are living longer, Shafik replies.
12.32pm GMT12.32pm GMT
12:3212:32
Breaking away from Mark Carney.... over in Greece, president Barack Obama has arrived in Athens.Breaking away from Mark Carney.... over in Greece, president Barack Obama has arrived in Athens.
Security is extra right in the Greek capital; there’s a complete lockdown, with protests banned, public transport stopped, schools closed down,.Security is extra right in the Greek capital; there’s a complete lockdown, with protests banned, public transport stopped, schools closed down,.
Some 5,000 local police and over 300 US security agents participating in what is an unprecedented security cordon thrown around the capital.Some 5,000 local police and over 300 US security agents participating in what is an unprecedented security cordon thrown around the capital.
A gun ship is plying the waters south of Athens, and there’s a drone flying overhead, says our correspondent Helena Smith.A gun ship is plying the waters south of Athens, and there’s a drone flying overhead, says our correspondent Helena Smith.
We’ll have a full report shortly. In the meantime, here’s how the day is playing out:We’ll have a full report shortly. In the meantime, here’s how the day is playing out:
Air Force One touches down in #Athens for #obama_athens visit(screen shot from ERT Pool via @AP Direct) pic.twitter.com/6zNUOXgBvOAir Force One touches down in #Athens for #obama_athens visit(screen shot from ERT Pool via @AP Direct) pic.twitter.com/6zNUOXgBvO
Obama arrives in Greece at start of his final foreign tour https://t.co/WrLutOiwcV pic.twitter.com/BmDsm6UpqCObama arrives in Greece at start of his final foreign tour https://t.co/WrLutOiwcV pic.twitter.com/BmDsm6UpqC
Happening now: Obama meets with Greece's president in Athens on his final foreign tour pic.twitter.com/ygETv07JFaHappening now: Obama meets with Greece's president in Athens on his final foreign tour pic.twitter.com/ygETv07JFa
Obama and Tsipras sit down pic.twitter.com/MUNHfto5RdObama and Tsipras sit down pic.twitter.com/MUNHfto5Rd
12.24pm GMT12.24pm GMT
12:2412:24
Andrew Tyrie takes Carney back to the slump in sterling since the Brexit vote, and tries to get him to admit that a weak pound is a good thing.Andrew Tyrie takes Carney back to the slump in sterling since the Brexit vote, and tries to get him to admit that a weak pound is a good thing.
Q: Was the fall in the exchange rate welcome?Q: Was the fall in the exchange rate welcome?
It was necessary, Carney replies. The purchasing power of the currency has gone down by 20%, as part of the process of adjusting Britain’s (whopping) current account deficit.It was necessary, Carney replies. The purchasing power of the currency has gone down by 20%, as part of the process of adjusting Britain’s (whopping) current account deficit.
(A better option would have been a surge in domestic productivity, of course, to drive up exports, but one can only dream....)(A better option would have been a surge in domestic productivity, of course, to drive up exports, but one can only dream....)
Q: OK, but was the scale of the correction welcome?Q: OK, but was the scale of the correction welcome?
Future events will decide that, says Carney.Future events will decide that, says Carney.
Tyrie then reads out a quote from former BoE governor Mervyn King, who said recently that the fall in sterling was indeed welcome.Tyrie then reads out a quote from former BoE governor Mervyn King, who said recently that the fall in sterling was indeed welcome.
Q: Do you welcome this intervention from your predecessor?Q: Do you welcome this intervention from your predecessor?
I’m aways keen to hear what Lord King has to say, straight-bats Carney, joking that his intervention was “unnecessary but welcome”.I’m aways keen to hear what Lord King has to say, straight-bats Carney, joking that his intervention was “unnecessary but welcome”.
And he promises to keep a vow of silence once he leaves the BoE in June 2019.And he promises to keep a vow of silence once he leaves the BoE in June 2019.
Economics professor Tony Yates thinks Carney should have batted questions about the weak pound out of the park:Economics professor Tony Yates thinks Carney should have batted questions about the weak pound out of the park:
Carney ought to say: given the revision down in our expected future income, and the increased riskiness of the UK, fall in £ was inevitableCarney ought to say: given the revision down in our expected future income, and the increased riskiness of the UK, fall in £ was inevitable
And to have fought against it with monetary policy would have triggered a recession. That's the answer to Tyrie's question.And to have fought against it with monetary policy would have triggered a recession. That's the answer to Tyrie's question.
UpdatedUpdated
at 12.25pm GMTat 12.25pm GMT