Catherine L Mann - Keynote interview

Following her keynote talk on cost of capital at ESCoE's 2024 Conference on Economic Measurement, Bank of England's Catherine L Mann is interviewed by chair Mary O'Mahony.
Watch the keynote recording: • Plenary III: Catherine...
That UK business investment has under-performed is not a new observation. Because business investment is a key ingredient in productivity and potential output, it is the focus for the second year agenda for The Productivity Institute. Central Banks care about business investment from both the demand and supply side and theory says that their policy rates should affect investment outcomes. A new framework suggests that how much business investment (and of what type) comes from the interplay of three different actors and analysis - economic net present value, manager decision-making, and financial investor funding. Central to each of these perspectives is the cost of capital. There are numerous measures of the cost of capital (internal funds, hurdle rate, WACC, ROIC). Catherine explored what we know about how those have evolved, and which one(s) appear to be most relevant for business investment.