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Bank Must Not 'squeeze Economy'

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Bank must not 'squeeze economy'

On Monday, the Ernst & Young Item Club will say the strong housing market must be watched, but the MPC must not rush into "damaging" interest rate rises.

It is predicting strong GDP growth of 2.9% in 2007 and 2.5% for 2008, and expects interest rates to rise further.

But it warns the MPC must be forceful, but not "squeeze the economy too hard" so that it jeopardizes exports.

...

"The MPC needs to rebalance the economy and cool the housing and financial markets, without jeopardizing exports."

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and they do this how?????

By keeping tighter control of monetary policy.

From about 2001 onwards.

They're gonna need a Delorean with the flux capacitor option pack...

delorean.JPG

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Edited by AvidFan

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"The MPC needs to rebalance the economy and cool the housing and financial markets, without jeopardizing exports."

and they do this how?????

http://www.bloomberg.com/apps/news?pid=206...&refer=home

The currency has lost 13.2 percent since January 2001, when George W. Bush took office, the most under any president since at least Gerald Ford, who left the White House in 1977. That's based on a Federal Reserve index that tracks the dollar against the currencies of 38 U.S. trading partners, including Germany, Japan and Canada.

The dollar's ``trend will be down over the next couple of years,'' said Richard Clarida, a former assistant Treasury secretary under Bush and now a global strategist at Pimco. The firm manages $687 billion, including the $102 billion Total Return Fund. ``A weaker dollar in conjunction with strong demand in the rest of the world is helping the U.S. rebound.''

Surely inflation targeting central banks are going to get into a complete mess if US go's down this route ?

Edited by Ash4781

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