The BankUndergound posted an interesting analysis of the impact of on households of their loose monetary policy. Here is an extract, follow the link for the entire paper.
Although existing differences in income and wealth means that the impact in cash terms varied substantially between households, in a recent staff working paper we find that monetary policy had very little impact on relative measures of inequality. Compared to what would have otherwise happened, younger households are estimated to have benefited most from higher income in cash terms, while older households gained more from higher wealth.
Households tend to report that looser monetary policy has made them worse offIn contrast to our findings, the balance of households in the 2017H1 NMG Survey – a biannual survey of households commissioned by the Bank of England – felt that they had been made worse off by lower interest rates since 2008. Those negative responses were concentrated among older households (Chart 7). When asked about the channels through which they had been affected, most focused on the effects on their interest payments and receipts – where older households have tended to lose out – rather than on their wealth.
Conclusion
There has been growing interest in the effects of monetary policy on the distribution of income and wealth. We find that the gains from monetary easing were distributed roughly in line with initial income and wealth holdings. Because the percentage changes in income and wealth were similar across all distributions there was no large impact on inequality. If anything, those at the bottom end of the wealth distribution gained slightly more in percentage terms. Furthermore, most households are estimated to have been made better off than they otherwise would have been if policy had been left unchanged.
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