Banking: Quantitative Easing

Lord Forsyth of Drumlean Excerpts

Wednesday 27th March 2013 Lords Chamber

[Lord Newby]

My Lords, the Bank can do a number of things. However, on the change in the remit, the idea of having intermediate thresholds, which the Fed and other banks around the world have adopted, is to give longer-term certainty about the path of interest rates, which, we hope, will stimulate business confidence.

[Lord Forsyth of Drumlean]

Did my noble friend see the report in the Financial Times on Monday that the Japanese company, Fujitsu, was going to invest £800 million in Britain, but that all that money will go to reducing the deficit on its pension fund? How much longer will we see artificial deficits being created because gilt yields are used to calculate the liabilities of pension funds, and these liabilities are being exaggerated by the effects of quantitative easing? When are the Government going to do something about this?

[Lord Newby]

My Lords, there is obviously a tension in respect of interest rates in that some people benefit from low interest rates and some people lose from low interest rates. It is the Government’s view that low interest rates are in the interests of the economy in promoting growth in a very difficult economic environment.