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Mr Bean - Key Mpc Member Dismisses Chances Of Early Interest Rate Rise

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http://www.guardian.co.uk/business/2011/mar/03/interest-rate-rise-hopes-recede

Prospects of higher UK interest rates next week faded on Thursday after a senior member of the Bank of England's monetary policy committee dropped a broad hint that he opposed an immediate increase in the cost of borrowing.

Within hours of the latest snapshot of the service sector showing a relapse following the weather-related rebound in January, Charlie Bean said Threadneedle Street could only bring inflation back to target by affecting the growth prospects of an already fragile recovery.

Bean, the Bank's deputy governor said he expected the combination of higher VAT, soaring commodity prices and a weak pound to result in inflation being "a little more persistent next year than presently embodied in our projections".

But Bean gave few signs in a speech to the Association of British Insurers that he was about to join the three members of the nine-strong monetary policy committee who voted for higher interest rates in February.

"Economists and monetary policymakers have long understood that there is generally no conflict between stabilising inflation and stabilising output when the economy is subject to adverse demand shocks. But that there is a real choice to be made when there are adverse cost shocks: inflation can be stabilised, but only at the cost of volatility in output," Bean said.

His comments echo those of the Bank's governor, Mervyn King, who has said that the higher interest rates needed to bring inflation rapidly back to its target would have led to lower output and a loss of jobs.

Bean added that the three "cost shocks" to the economy – the pound, VAT and commodity prices – were likely to have raised the price level by 9-13% since 2007. That compared with the 5% increase in the price level which has occurred in excess of that implied by the Bank's 2% inflation target, suggesting that the MPC had "...ended up accommodating around half the impact of the shocks on inflation".

Inflation to be a little more persistent like it has been for most of the decade.... And is has nothing to do with BoE monetary policy.

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  • 311 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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