Jon Cunliffe, Deputy Governor for Financial.....>

BOE: Jon Cunliffe, Deputy Governor for Financial Stability at the Bank of

England, highlights the challenges of a low-for-long interest rate environment

in a speech at the Society of Professional Economists. 

- He said that monetary policy is not powerless at the effective lower bound but

with other structural changes, including the weakened response of inflation to

unemployment, "the probability is that demand management will need to use more

tools to stimulate demand in downturns and work harder to prevent macro-economic

tail events."

- That suggests some mix of unconventional policy tools, such as quantitative

easing, and fiscal stimulus may well be needed if the economy takes another turn

for the worse. He said that fears over that aggressive use of monetary policy

tools to stimulate demand can create financial stability risks "can be

overdone," noting that there has been no explosion in real economy debt in the

low interest rate environment.