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Bank of England Official Defends Efforts to Stoke Risk Taking 

July 2, 2014
Jason Douglas, Real Time Economics

A senior Bank of England official Wednesday defended central banks against a charge they hear a lot these days: that their policies have stoked a flurry of financial risk-taking that will inevitably end in tears.

Andrew Haldane, the BOE’s chief economist, told a conference in London that reviving investors’ appetite for risk was one of the forgotten goals of crisis-fighting measures such as cutting interest rates to rock-bottom and buying safe assets such as government bonds, a policy known as quantitative easing.

“That’s why we did it. Lower rates and QE were an exercise in, among other things, trying to stimulate risk taking,” Mr. Haldane said at the Camp Alphaville conference in London. The economic cost of inaction would have been considerable, he argued. He said without ultralow rates and QE, the U.K. economy would be around 6% smaller than it is now.

Read More: Real Time Economics

 
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