Rates Are Like Mountains. It’s About Getting Down
Rates tend to spike and fall like a Patagonian precipice, but now there’s a Table Mountain theory of a long, flat plateau.
Descending was harder before the cable car. L'Aiguille du Midi above Chamonix, France.
Photographer: Emmanuel Dunand/AFP/Getty
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We have a new analogy for monetary policy. Huw Pill, the Bank of England’s chief economist, has given a speech in which he favored a “Table Mountain” scenario. In line with the wide and flat peak behind Cape Town in South Africa, the idea is that rates would reach a plateau, and then stay there for a long time. Under this scenario, according to Pill, rates needn’t go quite so high as in a “Matterhorn” scenario, named for the famously sharp triangular Alpine peak, but they would have to stay at that high plateau for an extended period.