Deputy Bank of England governor Charles Bean has sympathy for savers

Thursday, May 31, 2012
6:30 AM

The deputy governor of the Bank of England said he had “every sympathy” for pensioners who have found their living standards squeezed by low interest rates but said unusual circumstances demanded unusual policy settings.

Charles Bean said: “A the end of the day we have to set policy to steer the aggregate economy and try and keep inflation on target in the medium term. Inevitably that has distributional consequences. That is always the case. When we put the bank rate up that benefits savers to the detriment of borrowers and creates more unemployent.

He added: “We have been in a position with a rock bottom bank rate with the deposit rates and saving rates at very low levels, not just for a year, but for a sustained period of three or four years. There is no doubt that is having a significant affect on those who have done the right thing, put money aside for their retirement and they are now finding that their living standards are not everything they hoped they would be. We have every sympathy for them and we certainly don’t like being where we are.”