In the course of the conversation, Dave Ramsden began by setting out the Bank of England’s views on the economic outlook, in the UK and globally, considering a range of issues which meant that the risks to the Bank’s central forecast are to the downside. He moved onto discussing the MPC’s policy making in response to the corona virus recession, including a range of measures such as interest rate cuts, asset purchases and forward guidance.
One aspect which has caught much attention is the possibility of negative interest rates. The Bank and the PRA will start “structured engagement” in Q4 2020; the rationale is to assess the practical aspects, so that negative rates could form part of the toolbox if and when circumstances ever require. The interview moved onto the outlook for inflation. Dave set out how various different aspects of the UK and US economy, one much more open, the other more closed, helped in terms of understanding why the US Federal Reserve has recently switched to a formal “average inflation target”. Recent weak inflation data are quite understandable in the light of a major recession. Dave explained how traditional models are still valid in terms of inflation forecasting, paying particular attention to various factors which have affected the shape of the Phillips curve.
Lastly, Dave discussed the importance of close co-ordination of policy between the government and the Bank of England. He set out the backdrop to the recent expansion of fiscal and monetary policy, which he argued was necessary in order to prevent major disruption to the financial system which could have caused even more damage to the UK economy.
Sir Dave Ramsden has had not just one but two successful careers as a senior economist. He began his career in Her Majesty’s Treasury where he became Chief Economic Adviser and Head of the Government Economic Service. In particular he was responsible for advising on UK macroeconomic policy which included leading the Treasury’s work advising on whether the UK should join the Euro. He was knighted in 2015 for services to economic policy making.
In 2017, he moved to the Bank of England when he joined the Monetary Policy Committee, with the position of Deputy Governor for Markets and Banking. In particular, he is responsible for oversight of Markets and Banking directorates, while he also he sits on the Financial Policy Committee and the Prudential Regulation Committee.
In addition, he is also the Chair of the RTGS/CHAPS Board. Last, but certainly not least, Dave is President of the Society of Professional Economists, as well as being a Trustee of Pro Bono Economics and a visiting Professor at Kings College London.
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