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View the article online at http://citywire.co.uk/wealth-manager/article/a760271

Stewart Cowley: letter to Mark Carney

by Stewart Cowley on Jul 04, 2014 at 10:25

But, in reality, what it really says is that the Bank is spending a lot of time on administrative cleanliness rather than preparing for an imminent rate rise. This should be more widely appreciated – the markets will reward you for it (see Stop Talking the Pound Up).

The Gilt Market

Please stop reinvesting the money from gilts maturing within the Asset Purchase Facility’s portfolio back into the gilt market.

Gilt investors are getting a rotten deal as it is, and it really doesn’t need to be competing with the Bank for them given the meagre yields on offer.

I mean 2.6% for ten years is not really what our pensioners deserve. Besides, we still rely on the kindness of strangers since we are running a chronic budget and current account deficit still so you don’t want to put them off with artificially low gilt yields.

Tell Scotland how much it will cost to have their own Central Bank

The cost of setting up an Independent Scotland (or iScotland as I like to call it) has been variously set as £200 million or £2 billion.

Obviously, Scottish separatists have jumped on the lower number to justify their cause but couldn’t the Bank just inject a bit of realism into the whole thing and let them know, from your own experience, what the Scottish public are letting themselves in for if they vote “Yes”?

They are, at the least, going to need their own MPC, FPC and PRA and all that comes with it. The consultancy costs alone would surely come in at the lower figure.

Besides, tell them that, if they do go it alone, they will have to scrap their notes that London taxi drivers complain so bitterly about and us our sterling bank notes (which they will be forced to use should the Chancellor allow them to use the pound).

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1 comment so far. Why not have your say?

Gary Reynolds

Jul 04, 2014 at 11:28

Lovely letter Stewart. Cheered me up after hearing the BoE is scrubbing its annual cricket match. Not sure what will replace it, something we English are still good at perhaps? Anyway, outrageous from you as always, and spot on with your advice on what should drive interest rates.

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