Politics vs Economics: What Politicians Misunderstand About Markets
Many Happy Returns
00:00
The Transmission Mechanism of Monetary Policy
Jeremy Hunt has said it's taking too long for interest rates to be passed on. There is a misunderstanding about what deposits from consumers are actually there for the bank, he says. The Bank of England believes that by offering higher rates to savers, it encourages people to delay their consumption and demand calls off. People who now are mortgage free are putting money into savings - essentially they're breaking this transmission mechanism.
Transcript
Play full episode
