Two thirds of savers believe Mark Carney will be bad news
Mark Carney has been in the governor hot seat at the Bank of England for just a month but 69% of Moneywise readers have already said he will be bad news for their savings.
Keen to be seen as a man of the people, he rode the Tube to work on his first day and scored yet another PR hit when he announced that Jane Austen is to replace Charles Darwin on the £10 note.
While he also seems to be commanding the respect of his immediate colleagues (in his first Monetary Policy Committee (MPC) meeting in July, the rest of the members voted exactly the same way as him when he wanted to leave the current stance on quantitative easing unchanged), his arrival seems to have left savers unmoved.
In a recent poll, 48% of you said you think he'll keep looking after those in debt rather than those who save, while another 21% said you think he is more interested in getting us to spend than to save.
However, a third of you (31%) were more optimistic and told us you think Carney will be good for your savings. Of these hopeful souls, 20% said they will benefit if he can get the economy growing as soon as interest rates rise; and 11% agreed that if he helps to keep inflation in check, it will be good news for everyone.
Another positive is that Carney is certainly trying to make the Bank more open to the public – he is allowing journalists into the MPC meetings and issuing statements to explain the decisions the committee makes about the Base rate.
In its August meeting, the Bank once again voted to keep the Base rate at 0.5%, the historic low it's now been at for more than four years. So it seems we're still to see any radical changes and get a real feel for his impact on the UK economy.
What do you think? Let us know below.
Lower interest rates encourage people to spend, not save. But when interest rates can go no lower and there is a sharp drop in consumer and business spending, a central bank’s only option to stimulate demand is to pump money into the economy directly. This is quantitative easing. The Bank of England purchases assets (usually government bonds, or gilts) from private sector businesses such as insurance companies, banks and pension funds financed by new money the Bank creates electronically (it doesn’t physically print the banknotes). The sellers use the money to switch into other assets, such as shares or corporate bonds or else use it to lend to consumers and businesses, which pushes up demand and stimulates the economy.
Monetary Policy Committee
A committee designated by the Bank of England to regulate interest rates for the UK. The MPC attempts to keep the economy stable, and maintain the inflation target set by the government and aims to set rates with a view to keeping inflation at a certain level, and avoiding deflation. The MPC meets on the first Thursday of each month and discusses a variety of economics issues and constitutes nine members: the governor, the two deputy governors, the Bank’s chief economist, the executive director for markets and four external members appointed directly by the Chancellor.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
Also referred to as the bank rate or the minimum lending rate, the Bank of England base rate is the lowest rate the Bank uses to discount bills of exchange. This affects consumers as it is used by mainstream lenders and banks as the basis for calculating interest rates on mortgages, loans and savings.