Bank of England chief economist Andy Haldane, said ultra-low Bank of England interest rates since the financial crisis have probably taken a modest toll on productivity but were a price worth paying to avoid higher unemployment, in a lecture to be given at the London School of Economics.
Key quotes (via Reuters)
- 'total factor productivity', had shown its longest stagnation in more than 200 years
- Low interest rates had probably played a role, by keeping some heavily indebted, unproductive 'zombie' businesses alive
- Interest rates at 4.25 percent would have imposed a "very significant macroeconomic cost" in terms of more people out of work
- Options other than higher rates offered a better way to boost productivity
- What would be in it for frontier companies? A more productive supply chain is clearly in their interests