LONDON (Reuters) - The growth of intangible assets, such as brands and technology, is helping to keep central bank interest rates low, according to one of the Bank of England policymakers who has voted recently to cut borrowing costs
“This much-discussed low interest rate environment we find ourselves in, reinforced by the trend towards intangible assets that I have discussed today, in part informs my recent votes,” Jonathan Haskel said in a speech.
“Limited conventional monetary policy space means I continue to prefer to move now in order to ensure we achieve a sustainable return of inflation to target.”
Haskel and fellow rate-setter Michael Saunders have voted to cut Bank Rate by 25 basis points at each of the last three meetings of the BoE’s Monetary Policy Committee. The other seven MPC members voted to keep rates on hold at 0.75%.
In his speech at the University of Nottingham on Tuesday, Haskel said the rise of intangible assets might affect the way central banks manage their economies if they are harder for companies to borrow against.
Intangible-intensive firms were more affected by changes in financial conditions than tangible-intensive firms, he said.
If banks found it harder to lend against intangible assets, risk spreads would eventually rise and push down the risk-free level of interest rates, Haskel said.
Writing by William Schomberg; Editing by David Milliken