If we slice the mark-up data for non-financial companies on a sectoral basis, this suggests this rise has been reasonably broad-based (Chart 5). All but two of the ten sectors have seen mark-ups rise since 1987, although some are volatile. Six of the ten have seen them rise by more than 30 percentage points. Among the largest rises have been in manufacturing (70 percentage points), professional, scientific and technical (62 percentage points) and transport and storage (57 percentage points). This broadly mirrors the international evidence. 12  One apparent exception is the banking sector. Chart 6 plots a measure of banks’ net interest margins (NIMs), as a proxy for mark-ups, in the UK, US and euro area since 1996. NIMs appear to have been broadly flat in these countries over recent decades. If anything, they may have fallen over the past decade. The latter is potentially the result of the low levels of official interest rates, constraining the ability of banks to lower their deposit rates in order to protect margins (for example, Claessens, Coleman and Donnelly (2017)). Another way of slicing the data is to ask how much of the rise in mark-ups is due to a compositional shift over time towards sectors whose mark-ups are already high and how much reflects a generalised rise in mark-ups within each sector. Chart 7 shows this decomposition for UK-listed firms.
That reduces the cost of borrowing across the board, from mortgages, to business loans, to corporate debt. Our securities purchases are an important reason why longer-term interest rates are at or near post-World War II lows. In addition, we’ve publicly announced that we expect to keep the federal funds rate exceptionally low at least through late 2014. This guidance tells investors that short-term interest rates are likely to stay low for a long time, which then gets passed through to longerterm rates. Of course, our statements are not an absolute commitment to keep rates near zero. It’s simply the FOMC’s current judgment about the best future course of policy. If the economic outlook changes, then the guidance could change too. Let me emphasize that the unusually stimulatory monetary policy now in place won’t last forever. Eventually we will cut back the size of our securities holdings and raise our unusually low interest rate target. We’ve thought hard and communicated frequently about how to exit from these special conditions.6 The key point is that the economy currently needs an  5  See Williams (2012) for a discussion of the Fed’s mandate and the implications for the conduct of monetary policy. 6  See the discussion of exit strategy in the minutes for the June 2011 FOMC meeting (Board of Governors 2011). 4  BIS central bankers’ speeches  extraordinarily supportive policy. But we’ll reverse course when the time comes to remove this support.