Bank’s deputy governor says low rates will be a new norm

BANK of England deputy governor Charlie Bean said yesterday that interest rates will likely not return to pre-crisis levels even after they begin to rise.

Speaking at a dinner for the North East Chamber of Commerce, Bean said that bank rates may only return to relatively low levels.

“When the Bank rate does rise, it will probably do so only gradually and to a level that is likely to remain materially below its pre-crisis average of five per cent for some while – I have something like a two to three per cent range in mind here.”

Listing his reasons for the argument, Bean said that high levels of public and private debt and a glut of savings in emerging markets would probably prevent interest rates from rising to pre-crisis levels.

His words echo comments made in a speech by monetary policy committee member David Miles at the end of February. Bank governor Mark Carney also argued late last year that interest rates would not “return to historically normal levels any time soon”.