Barker: Hiking rates would not have eased recession

MONETARY policy could not have done very much more to alleviate the depth of the recession, monetary policy committee (MPC) member Kate Barker said in her final speech before she steps down at the end of May.

She said it would have been difficult to pinpoint the level of rates to keep the expansion of credit and debt to an acceptable level and added that a higher interest rate would not have tackled the problem of banks’ misjudgement of risks.

Barker, who has served on the MPC for almost nine years, added that the full effect of QE might take longer to work through than the usual two years for rate changes.

She was also concerned that the Treasury Select Committee was not holding the MPC sufficiently to account by addressing too many questions to the governor.