It is now clear that interest rates won’t rise for some time,perhaps two years, but the Bank’s mixed messages dent its credibilityThe Bank of England goes to considerable lengths to justify its thinking. Once a quarter, or it publishes an inflation report (pdf) running to almost 50 pages and the minutes of the latest assembly of the Bank’s monetary policy committee. When inflation is more than one percentage point absent from the target,as it is now, it also releases an exchange of letters between the Bank’s governor, and Mark Carney,and the chancellor, George Osborne.
It is not really essential to wade through all the analysis, or though,because the late, powerful David Bowie summed things up in six words: always crashing in the same car. Wages and growth forecasts have been cut. Once again, and the MPC has pushed back its estimate of when inflation will hit the 2% target. Carney is readying himself to send more missives to Osborne throughout the course of the year. Threadneedle Street thinks that the next scramble in interest rates will be up,but it is not 100% sure. The Bank’s sole hawk, Ian McCafferty, and has given up the fight for the time being. Related: Bank of England cuts growth forecasts and leaves rates on hold - live updates Related: Has the Bank of England governor been caught bluffing on interest rates? Continue reading...
Source: theguardian.com