1. Young_mark said...

Forget about the politically motivated spin put about by dodgy journalists. Read the report instead. It’s available free of charge. Here’s the overview from the report.


“The past three months have witnessed considerable turmoil in international financial markets. In the United Kingdom, output rose briskly in the third quarter. Consumer spending appears to have stayed firm. And businesses’ investment intentions remained relatively upbeat. Surveys suggest that GDP growth may have begun to slow in the fourth quarter. Economic prospects deteriorated in the United States and other advanced economies but remain buoyant in the emerging economies.

Under the assumption that Bank Rate follows a declining path implied by market yields, the Committee’s central projection is for output growth to slow, reflecting past increases in Bank Rate and the effects of recent financial market developments. Growth then recovers, as some of those effects wear off and the impact of declining interest rates and a lower exchange rate is felt.

The margin of spare capacity within companies remained limited but showed signs of easing. Pay pressures appeared subdued. And CPI inflation fell back to around the 2% target. But oil prices reached a new peak and futures prices for wholesale gas rose. In the central projection, higher energy and import prices push inflation above the target in the near term. Inflation then falls back to settle around the target in the medium term. The risks to growth are on the downside, while those to inflation are balanced.”

As you can see, no mention whatsoever of a severe economic set back. Just yet more economic growth, although somewhat slower than we’ve been used to for the last few years. There’s also the hint that interest rates may be cut. Quite how journalists convert this into 2 interest rate cuts in 2008 and a further one in 2009 is beyond me. So calm down, the MPC is not about to pump up the property market, just as the long awaited crash appears to have started.