The Bank of England released its quarterly inflation report this week, prompting much discussion in the Square Mile. There had been speculation in the City that interest rates would rise, however the Old Lady of Threadneedle Street soon put those rumours to rest.
“While there are some who believe that the general public’s interest in the state of the economy should be increased, that is not our current objective,” the Bank explained. “While the economy is on the road to recovery, at the moment we are keen to keep the public’s awareness and interest in economics as low as possible.”
The general population’s interest in the world of finance is currently been at an all time low, having fallen to 0.5% in 2009, staying at that level ever since. This sudden decrease was the result of a concerted effort among money-makers to distract the man on the street from what was going on. “With Lehmann and the whole sub-prime thing, we honestly had no idea what we were doing,” reports one industry insider. “We thought that the best thing to do was to make everything about the economy as boring and un-interesting as possible.” This strategy was a great success, allowing the banking industry to get back to business as usual.
When you look at the data over a longer time period, it is clear that this decrease is not just a one-off, with the decrease in general interest in the economy part of a larger trend.
(Created with DataWrapper, Source: Bank of England)
Official Bank of England figures indicate that interest has fallen from 10-15% in the 70’s and 80’s, to the low single digit numbers that we see today. Economist Henry Kelsey-Wilkinson believes that this is due to the range of other more interesting things on offer in the modern world. “In the 80’s, there honestly wasn’t that much going on, so reading about GDP and FDI didn’t seem like such a bad thing. These days the FT is up against Netflix, and there’s only one winner in that fight.”
However regardless of the underlying reason, the fact remains that interest rates are staying low in the near future. Governor Mark Carney had the last word: “We continue to think that interest rates will remain on hold until the second half of next year, later than the markets and most economists expect.”