Business secretary claims bank did not raise interest rates enough
Here is a full summary of the lines from Jacob Rees-Mogg’s morning interview round.
Rees-Mogg, the business secretary, refused to accept that the mini-budget was the primary cause of the market turmoil in the UK that has led to the Bank of England having to make emergency interventions to rescue pension funds. And he criticised the BBC presenter Mishal Husain for making the link, accusing her of being unprofessional. (See 9.21am.) Rees-Mogg suggested that it was the Bank itself that was mainly to blame, because it did not raise interest rates by as much as necessary in September. He told ITV’s Good Morning Britain:
I would point to the day before, when the monetary policy committee did not put up interest rates as much as the Federal Reserve had. And that was the more profound effect on markets.
That’s an actual price and that was a widening of the differential between the benchmark which is effectively the US, the low-risk investment and the UK.
He said he did not think there was a “systemic” problem with the pension funds market. Some pension funds were experiencing difficulties, he said. But pensions were not at risk, he said.
He played down the significance of this morning’s ONS figures showing the economy shrank by 0.3% in August from July. He said:
The previous quarters figure showed a contraction, was then revised to show economic growth. So, be very careful about how you interpret figures immediately after they’re released, It’s a small amount of a very large economy, but these figures are notorious for being revised afterwards.
He rejected claims that the plan for a revenue cap on low-carbon energy generators did not amount to a windfall tax. He explained:
What this is doing is rationalising the market in a way that energy companies have been in favour.
The government has already intervened to affect the gas price. It started at the retail rather than the wholesale level.
He said that he had a mortgage himself, and that it has gone up.
He played down, but did not deny, reports saying Liz Truss blocked his proposal to launch a public information campaign urging people to save energy. Asked about the story, he said:
I think that rather overstates it. We’ve done a number of things and there is an online advice for households that the government provides.
A lot of this work has actually been done by newspapers. Lots of advice is available to individuals on how they can save money.
Hold on. You suggest something is causal which is a speculation. What has caused the effect in pension funds, because of some quite high-risk but low probability investment strategies, is not necessarily the mini-budget. It could just as easily be the fact that the day before the Bank of England did not raise interest rates as much as the Federal Reserve did, and I think jumping to conclusions about causality is not meeting the BBC’s requirement for impartiality. It is a commentary rather than a factual question.
Continue reading…Business secretary claims bank did not raise interest rates enoughHere is a full summary of the lines from Jacob Rees-Mogg’s morning interview round.Rees-Mogg, the business secretary, refused to accept that the mini-budget was the primary cause of the market turmoil in the UK that has led to the Bank of England having to make emergency interventions to rescue pension funds. And he criticised the BBC presenter Mishal Husain for making the link, accusing her of being unprofessional. (See 9.21am.) Rees-Mogg suggested that it was the Bank itself that was mainly to blame, because it did not raise interest rates by as much as necessary in September. He told ITV’s Good Morning Britain:I would point to the day before, when the monetary policy committee did not put up interest rates as much as the Federal Reserve had. And that was the more profound effect on markets.That’s an actual price and that was a widening of the differential between the benchmark which is effectively the US, the low-risk investment and the UK.He said he did not think there was a “systemic” problem with the pension funds market. Some pension funds were experiencing difficulties, he said. But pensions were not at risk, he said.He played down the significance of this morning’s ONS figures showing the economy shrank by 0.3% in August from July. He said:The previous quarters figure showed a contraction, was then revised to show economic growth. So, be very careful about how you interpret figures immediately after they’re released, It’s a small amount of a very large economy, but these figures are notorious for being revised afterwards.He rejected claims that the plan for a revenue cap on low-carbon energy generators did not amount to a windfall tax. He explained:What this is doing is rationalising the market in a way that energy companies have been in favour.The government has already intervened to affect the gas price. It started at the retail rather than the wholesale level.He said that he had a mortgage himself, and that it has gone up.He played down, but did not deny, reports saying Liz Truss blocked his proposal to launch a public information campaign urging people to save energy. Asked about the story, he said:I think that rather overstates it. We’ve done a number of things and there is an online advice for households that the government provides.A lot of this work has actually been done by newspapers. Lots of advice is available to individuals on how they can save money.Hold on. You suggest something is causal which is a speculation. What has caused the effect in pension funds, because of some quite high-risk but low probability investment strategies, is not necessarily the mini-budget. It could just as easily be the fact that the day before the Bank of England did not raise interest rates as much as the Federal Reserve did, and I think jumping to conclusions about causality is not meeting the BBC’s requirement for impartiality. It is a commentary rather than a factual question. Continue reading…