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Mpc Pair Go Public With Inflation Fear

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thisismoney

Two more Bank of England policymakers have flagged up worries about the persistently high level of inflation in the UK, but insist they are not ready to raise interest rates.

Monetary Policy Committee member David Miles told the Daily Mail that the Consumer Prices Index's 3.4% rate was 'uncomfortably' far from the Bank's 2% inflation target.

Fellow rate-setter Adam Posen used a London speech to highlight the 'slow upwards creep' in inflation.

But neither economist was willing to advocate an immediate rate increase, even after fellow member Andrew Sentance voted for a hike at this month's meeting.

Miles said: 'My own judgment is that we haven't yet got to the point at which a tightening in monetary policy is the right thing to do.'

Posen said there was no reason to panic about higher inflation expectations, and that it 'certainly is not a reason to tighten policy when the forecast argues against so doing'.

While there is a risk of a dive back into recession, he said the UK could well continue recovering.

In that case, 'I would be only too happy to vote for an interest rate increase,' he told the Society of Business Economists.

In addition to his vite for an interest rate rise at the June MPC meeting, their colleague Andrew Sentence on Monday said the fiscal plans announced in the Budget were much as expected and did not change his view that it was time to start gradually withdrawing the extraordinary stimulus now in place.

Mr Sentence had voted for an increase in rates to 0.75%. That prompted a jump in the value of sterling, while the euro continued its downward trend.

Higher interest rates make the pound a more attractive investment and tend, therefore, to increase its value.

Read more: http://www.thisismoney.co.uk/news/article.html?in_article_id=507647&in_page_id=2#ixzz0sPuMV9a7

The old "it's the right thing to do" argument.

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thisismoney

The old "it's the right thing to do" argument.

Not quite. I think the worst that can be said about the phrase 'My own judgment is that we haven't yet got to the point at which a tightening in monetary policy is the right thing to do' is that it's a bit tautological. Whoever this is is just saying that they think it's right not to tighten monetary policy yet -- they're not giving any reason, at least not in that specific phrase. The reasoning (such as it is) follows this phrase in the article.

Where the line gets crossed in my view is when (as Gordon Brown seemed to most often do) they say 'We'll do such-and-such because it's the right thing to do.'

In this case, there's some pretence of giving a reason, even though it's a non-reason.

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Just covering their backs?

They are worried about inflation (good quote to bring up when inflation is rampant?) but don't want to raise interest rates because they are not allowed?

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Not quite. I think the worst that can be said about the phrase 'My own judgment is that we haven't yet got to the point at which a tightening in monetary policy is the right thing to do' is that it's a bit tautological. Whoever this is is just saying that they think it's right not to tighten monetary policy yet -- they're not giving any reason, at least not in that specific phrase. The reasoning (such as it is) follows this phrase in the article.

Where the line gets crossed in my view is when (as Gordon Brown seemed to most often do) they say 'We'll do such-and-such because it's the right thing to do.'

In this case, there's some pretence of giving a reason, even though it's a non-reason.

Erm, he is on the MPC. He is saying he won't vote for an increase in interest rates, because it is the right to do... Atleast, that's how I read it.

David Miles

Chancellor Alistair Darling has appointed Morgan Stanley economist David Miles, author of a government-backed report on the mortgage market, to the Bank of England's monetary policy committee to replace maverick labour-market expert David Blanchflower.

Miles, who is visiting professor of finance at Imperial College London, alongside his day job at Morgan Stanley, recently gave a relatively upbeat assessment of the prospects for the UK economy, in a report co-produced with the Institute for Fiscal Studies.

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It's time we had people on the MPC that can actually perform their job properly.

They have the remit to contrrol inflation.

They MUST reaise interest rates.

If not, they are not doing their job and should be sacked.

Maybe they are enjoying cheap money and want that to continue?

Edited by TheCountOfNowhere

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  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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