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  • Dr Gerard Lyons

I am quoted in the Sunday Times interview with the Bank of England Governor

Today I was quoted in the Sunday Times interview with the Bank of England Governor.




Also, to note from the interview.


QE will never be fully reversed. Importantly for markets, Bank will be left holding hundreds of billions of gilts because of QE, but unclear how many hundreds. Piece reminds us, Bank will ease off on QE when rates hit 0.5%. In my view, QE should have stopped some time ago.


Financial stability risks have been largely overlooked given the market focus on inflation. Perhaps these risks are under-estimated. Close to zero rates mean markets not pricing properly for risk, while the unnecessary scale of QE means yields not reflecting true demand & supply as the biggest buyer of gilts is a non commercial player (the Bank). All the more reason to exit from emergency policy measures as soon as possible.


In terms of rates and inflation - given their poor communication watch what they do and don’t listen to what they say might be the message - rates are at an emergency level and will rise - focus is on “secondary effects” - impression is they will lag not lead.