UK monetary policy is in a remarkable place, with the base rate nearing seven years at its historic low of 0.5 per cent and the Bank of England introducing a range of unconventional measures in order to help deal with the fallout from the 2008 financial crisis.
While this must unwind at some point, rates are likely to remain unusually low for years to come. Given the possibility that we are closer to the next recession than the last one, what does this mean for the role of monetary policy next time around? Can macro-prudential tools provide sufficient headroom? And does the balance between fiscal and monetary policy need re-exploring?
At an event at its central London headquarters, chaired by The Times’ Economics Editor Philip Aldrick, Resolution Foundation Chief Economist Matthew Whittaker presented new analysis on the impact of monetary policy during the downturn. Former MPC member Kate Barker, Chief Economics Commentator at the Financial Times Martin Wolf and Angus Armstrong, Director of Macroeconomics at the National Institute of Economic and Social Research then debated the future role of monetary policy, before taking part in a wider Q&A.