Weak pass-through may shield UK from sudden rate rise – BoE’s Saunders
Central banks may start to lose control of policy transmission even above lower bound, says MPC member
Past trends imply the UK could be vulnerable to a sudden spike in mortgage rates, the Bank of England’s Michael Saunders said on March 6.
But changes in banks’ business models since 2008 may have mitigated the risk, the external monetary policy committee member argued. Saunders said that since 2008, there had been an unusual period of weakness in the pass-through of monetary policy to retail interest rates. Speaking at the Imperial College Business School, he said it may be some time before
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