ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOTT MURNAGHAN: Now to the economy and the Governor of the Bank of England, Mark Carney, said this week that interest rates could rise to what he called, he defined it as a new normal, roundabout 2.5% - remember, interest rates are 0.5% at the moment, that would happen according to Mr Carney by 2017.  But what about after that?  When could we say rates would go back to the old normal, I suppose round about 5%.  Well our Economics Editor Ed Conway went to the Bank of England on Friday to speak to Mr Carney’s number two, he is the Deputy Governor of the Bank of England, Charlie Bean, on what was his last day in the job and Ed Conway started by asking him about the governor, Mark Carney’s comments about that, about the new normal. 

CHARLIE BEAN:    Okay, this is my office and I have to say I shall miss it.

ED CONWAY: His final day, the Bank of England’s longest serving senior policy maker  is about to leave the building.  After 14 years here in Threadneedle Street, Charlie Bean is retiring as Deputy Governor.  Now in his final interview, the man who was central to the Bank’s response to the financial crisis has admitted one or two regrets. 

CHARLIE BEAN: The big thing of course, and it’s not particularly a bank thing, it’s a comment on the economics profession, the policy making profession, is that we weren’t sufficiently cognisant of the risks that were building up in the financial system, so that’s my biggest regret, that I wasn’t more conscious of that and I think collectively the profession needed to be more conscious of that.  Now that’s not to say that we could have avoided everything that happened but we might have been able to reduce its impact.  

EC: He also said that markets were right to expect interest rates to go up at the turn of the year and that in the long term they could head back to higher levels still.  Let’s say that over the next five years the normal is more like 2.5%, 3%.

CHARLIE BEAN: That’s a reasonable number.

EC: But after that there’s nothing to stop it going back to 5% being the normal say ten years from now.  

CHARLIE BEAN: That may well be so.  I wouldn’t want to say it’ll be back there in ten years but I think it’s plausible that over the very long run, if you want to call it that, that these headwinds will abate.  It may well be reasonable to think in that very long term you might go back to 5% but it is probably quite a long way down the road.  

EC: There’s a real sense of an end of an era as Charlie Bean retires.  Not only is he the last of the senior management team at the Bank to be replaced, in fact he is the only member of the Monetary Policy Committee who has actually had experience of changing interest rates, once he goes none of the rest of them will have done that before which is why his comments about rates, about quantitative easing, about monetary policy in general, are looked on so intently but rate hikes are no longer this man’s concern.  His leaving gift, a globe marked with all the places he’s been sent on bank duty.  His next stop, a long holiday, preferably somewhere more relaxing.  Ed Conway, Sky News.