Free Trial

MNI BRIEF: Ending Reserve Remuneration Wrong - BOE Bailey

MNI BRIEF:
MNI INTERVIEW:
(MNI) London
(MNI) London

Bank of England Governor Andrew Bailey pushed back against the idea of ending reserve remuneration while predicting that the final size of the Bank's balance sheet would be at the top end of its previous estimates.

Central bank reserves are remunerated fully at Bank Rate, driving up interest rate costs as the rate has risen to 5.25%, leading to some calls for a rethink of the remuneration regime. However, Bailey opposed change in evidence to the Lords Economic Affairs Committee Wednesday, saying it would be "the wrong thing for us".

Asked if he still thought the final, steady state of central bank would be within the BOE's previous estimate of GBP325-480 billion Bailey said he'd "probably be towards the upper end of that range." He also said Bank Rate would settle somewhere in the middle of a zero to 5.25% range and expressed doubts about the power of forward guidance. (see MNI INTERVIEW: Forward Guidance Key Tool However It is Called)

MPC member Swati Dhingra could focus on balance sheet issues at an MNI event on Feb 21. (see MNI INVITE: Livestreamed MNI Connect VC with BoE Dhingra On Feb 21)

MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
True
MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
True

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.