Wednesday, Nov 15, 2006
An interesting one for those that think Gordon controls the MPC
The Times: Has MPC decided it is time to act tough?
So the Bank of England sprang into action last week just as predicted, offering the nation a double “high five” — an increase in interest rates to 5 per cent, their highest level for five years. What seems to have rattled the MPC’s gilded cages is a disturbing mix of short-term worries and long-term trends. Taken together, these could signal the end of an extraordinarily benign and protracted period of low interest rates and cheap money. The increase brought to an end a 61-month run of official rates of less than 5 per cent. As Michael Saunders, of Citigroup, noted, this was the longest such stretch since 1956. This prolonged era of easy money was made possible — and necessary — by a series of shocks to the housing market correction of 2004-05, coupled with the favourable, disinflationary effects of globalisation.
1 Comment
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1. paul said...
"This prolonged era of easy money was made possible — and necessary — by a series of shocks to the housing market correction of 2004-05"
Ha. You aint sen nothing yet.