Sunday, Sep 13, 2009
Bank's policy credibility ebbing
Telegraph: Bank's code of omertà broken
I suppose we should remember that Blanchflower was not on the MPC when the infamous August 2005 rate cut was voted in, against King's wishes. At that time, house prices were stagnant and inflation was rising - it is accepted that this vote alone further stoking the credit boom for another two years by sending the wrong signal and creating a strong moral hazard. But what Blanchflower was advocating in the autumn last year was an early rate cut to head off any downards slip in house prices. This too would have been another crass policy error so in many ways it may have been a good that thing that he didn't get his wish granted.
Posted by paul @ 09:54 AM (460 views) Add Comment
3 Comments
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1. peter_2008 said...
"Unless the (inflation) forecasts were downgraded massively, he would refuse to sign up to them."
Hmmm... Sooo...Remind me what is the CPI like 12month later? What!? +1.8% yoy? In the worst recession in 60 years? When private sectors are getting 10% pay cut across the board?
Yeaaaaa, he needed to leave the MPC, because once the hyperinflation starts SOON, he knows he is going to get egged.
2. clockslinger said...
This is exactly the kind of self serving kiss and tell memoir that will play well with the mass of voters who seem to believe HPI is the basis on which to build an economy. How about it.. Blanchflower "friend of the homeowner" as govenor of the bank of England. Wouldn't surprise me in the least.
3. Chilli said...
Makes himself sound like quite the hero. By his version, the 1.50 basis cut was solely due to his own lobbying. This article re-enforces my belief that blanchflower is a small mind with a big ego.
Perhaps the 1.5 drop was the right call. Saving people's jobs always sounds like the right call, however not if most of the jobs in society today are 'fluff' jobs. The Bank and the UK as a whole need to re-evaluate what real growth is. Still massive unemployment, idleness and starvation is even worse than 'fluff' jobs.