“It’s really about the aging of the population, and the fact that we all tend to save more as we get older, and the interest rate is the price of money, so it balances savings and investment, and in the case of older people they tend to be,” he said. – Greater savings compared to investment demand.
“This indicates that we will return to a lower level.”
With inflation under control, there are increasing risks to the economic outlook from rising interest rates and still-painful energy prices.
Mario Draghi, former president of the European Central Bank, predicted a recession in the eurozone.
“It is almost certain that we will see a recession by the end of the year,” Draghi, who was also Italy’s prime minister, told a Financial Times conference. “It is clear that the first two quarters of next year will show that.”
Mixed messages at the Bank of England as fears grow Bailey risks doing too much to fight inflation
The governor has a history of clashing with his colleagues — and making costly mistakes in the process
With inflation higher than ever in 2022, the Bank of England has been largely united.
There was widespread agreement among policymakers on the necessity of raising interest rates, as officials sought to show their seriousness in controlling inflation.
Now the situation has changed.
With interest rates at 5.25% and inflation on its way down, economists and financial markets are confident the bank has done enough to bring rates back under control.
But there is no clear agreement on what to do from here. Policymakers are divided over when to start cutting interest rates and how quickly.
At the last meeting of the Monetary Policy Committee last week, three members of the nine-person committee voted in favor of raising interest rates, supporting a move to 5.5%. Katherine Mann, perhaps the most hawkish member of the committee, suggested that it was better to risk interest rates rising too much and cutting them sharply if necessary.