Some past sources of uncertainty were avoidable. He highlights how a more stable monetary environment has helped to remove uncertainty about policy makers’ objectives, although it cannot eliminate uncertainty about the short-term path of the economy or official interest rates as the MPC itself responds to unpredictable cyclical developments. Alongside this unavoidable uncertainty, there has been some avoidable and undesirable uncertainty about short-term sterling money market interest rates. As Paul Tucker stresses, given the MPC decides its interest rate each month, “…there should be no uncertainty about the general level of overnight rates in the money markets.” The reality, however, has been that overnight interest rates in the UK have historically been highly volatile. Paul Tucker says, “That has created uncertainty for users of the sterling money markets – banks, asset managers and, of course, corporate treasurers.”
Published on
19 May 2006
Press release