Comment: Carney urges patience over recovery

Terry Murden. Picture: TSPL

Terry Murden. Picture: TSPL

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THE central message from Bank of England governor Mark Carney seems to be that recovery is taking hold, but that no-one should expect it to gain any real traction any time soon.

His first public speech was littered with assurances that Britain was on track to grow, but dangers lurked that could halt or slow down its progress.

Growth prospects, he said, were “solid, not stellar”. Unemployment would come down, but not as quickly as markets expect, and would require “a great many jobs” to achieve the 7 per cent unemployment target.

Much of his speech outlined what we already know or have been told to expect – that interest rates will remain low until that unemployment target is reached – but yesterday in his maiden address he emphasised that rates will only rise if conditions allow. What he is most concerned about is choking off recovery by raising rates too soon.

Beyond that he may have had the markets’ adverse reaction to his forward guidance in mind when he spoke of the option for further stimulus. But he offered no specifics.

At least he presented reassurances that the forward guidance gave some certainty about where the economy is headed and what measures the Bank is prepared to take to get it there.

By this process Carney wants to inject more confidence in monetary policy, though he is leaving enough wiggle room to switch horses if conditions should change. That should allow him to be more fleet of foot than his predecessor, who missed the early signals in the banking crisis.

Syrian crisis risks destabilising markets

WHILE the Bank of England tries to steer the economy along a more certain path, the politicians are being distracted by more potential instability over the Syrian crisis.

Markets, already in bearish mode as a result of hints that the US would begin to withdraw quantitative easing, have been spooked by threats of military intervention by the West following the Syrian regime’s chemical attack on its own people.

Equities have fallen across various bourses while investors looking for safer places to lock up their money have driven up gold prices. Oil has also risen and could hit $125 a barrel if tensions continue to mount and threaten to disrupt supplies.

The initial market response may have been overdone, but these are difficult times for markets. Investors can expect some volatility in the days ahead.

Women business angels doing it for themselves

ANOTHER victory was secured for Scottish businesswomen at yesterday’s launch of a group that will bring together female angels.

At present, only two in 100 business angels are women, a pitifully small number, but one that those behind Investing Women are determined to change.

The body itself is an example of positive discrimination, with females being preferred as investors and recipients, but it is probably justified if it results in a more gender-balanced support network for up-and-coming entrepreneurs.

It properly takes off in January, though some early investments are likely before then and it will be particularly interesting to see what sort of businesses get funding and what sort of gems they can unearth. After all, a woman’s instinct is a worthwhile asset in itself.

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