Published: February 2020 (5 Min Read)

A cartoon from 1797 led to the Bank of England being called “The Old Lady of Threadneedle Street”.

The cartoon shows the Prime Minister of the day, William Pitt the Younger.  He appears to be wooing an old lady – who represents the Bank of England.  But his true intention is to get his hands on the Bank of England’s gold reserves: the gold coins in her pocket and the money-chest on which she is firmly seated.

A clear representation of the Bank’s strict and puritanical reputation!

Recent research however suggests a more recent relaxation of standards. UK monetary policy seems to have caused an increase in the number of babies being born.

Children are expensive and swings in families’ cash-flow can affect families’ decisions on whether and when to have a baby.

For families with an adjustable interest rate mortgage in 2008, the sharp fall in Bank Rate amounted to a windfall of around £1,000 per quarter in lower mortgage payments. In this post the Bank’s researchers show that people responded to this cash-flow boost by having more children. In total, they estimate that monetary policy increased the birth rate in the following three years by around 7.5%. That’s around 50,000 extra babies.

No wonder Mr Carney is an expert on climate change!