The House of Commons Treasury Select Committee has called for written submissions to help the inquiry, launched on Thursday, to assess how effective post-2008 monetary policy was and the impact of any “unintended consequences” on the UK economy.
It comes amid concern over the Bank of England’s continued commitment to “increasingly unconventional” forms of quantitative easing, with interest rates at 0.25% and inflation remaining below the bank’s own 2% target.
Andrew Tyrie MP, chairman of the Treasury Committee, said: “The efficacy of monetary policy or otherwise, its unintended consequences, and its prospects, need careful examination.The Treasury Committee will continue to act as a safeguard on the operational independence of the Bank. The Treasury indemnity, which underpins parts of the Bank’s monetary policy, could all too easily encourage the Treasury, or politicians, to put undue pressure on the Bank. The Committee will examine the risks of that, too.”
Written submissions to the inquiry have been invited on a wide-range of issues from the effectiveness of holding the bank rate near 0% and quantitative easing to the unintended consequences of the policies such as the impact on asset-price inflation, house prices and financial stability.
The impact on competition and so-called ‘zombie companies’, as well as the impact on the structure of capital and commodity markets, will also be considered during the inquiry.
The banks approach came under fire from Prime Minister Theresa May during her speech at the Conservative Party conference in October when she criticised the “bad side effects” of what she labelled the “emergency medicine” given to the economy following the crash of 2008.
In the speech, May said: “We have to acknowledge there have been some bad side effects. People with assets have got richer. People without them have suffered. People with mortgages have found their debts cheaper. People with savings have found themselves poorer.”
The deadline for written submissions 5 March 2017. For details on how to enter a written submission and further details about the inquiry visit the House of Commons website.
