Watch: Economy moving towards ‘hikes’

BBC Radio 4’s Money Box Live Wednesday, 2 May 2019 at 1502 BST On Radio 4 and Online

Listen to the programme Programme transcript (20 pages)

Bank of Canada Governor Stephen Poloz says years of record low interest rates will soon begin to rise as inflation reverts to 2% and the economy becomes less reliant on household spending.

This shift from a cautious to a more aggressive approach to monetary policy sets the Bank up for a number of years of higher interest rates, or “hikes”.

The Reserve Bank of Australia has also been raising interest rates.

Finance correspondent Graeme Leach joined presenter Sarah Smith to take your calls.

Programme transcript (20 pages)

All three central banks – the Bank of Canada, the Reserve Bank of Australia and the Bank of England – have long held loose monetary policy, recently lowering rates as a response to the UK’s uncertainty following Brexit and weak growth in China.

But since the global economic crisis of 2008-09, the three central banks have continued to cut rates and combined to cut rates by two percentage points. This almost simultaneous move continues to fuel expectations of an increase in the coming months.

During the Brexit period in particular, the US Federal Reserve, the European Central Bank and the Bank of Japan were careful not to be seen as taking action which could be interpreted as diminishing the ability of the UK to leave without the chaos many had feared.

These three central banks now need to stand united and be seen as making the right decisions when and if interest rates start to rise.

Finance correspondent Graeme Leach joined Sarah Smith to take your calls and hear how people are preparing for rate rises.

Producer: Joseph Burton

Producer: Zoe McHale

Executive producer: Marta Wilson

Director: Cameron Mackintosh

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