Friday, October 31, 2008

Blanchflower says BoE should have cut rates sooner

Bank of England member David Blanchflower says bank was slow to act on rates

Prof. Blanchflower, who has been arguing in favour of lower borrowing costs for most of the past year, said the nine-member MPC committee had made a mistake by leaving rates at 5pc until this month. In a speech at the University of Kent, Prof Blanchflower said: "With hindsight, monetary policy has not been sufficiently forward looking. Changes in monetary policy only affect the real economy with a substantial lag... It is not sufficient to consider the data month by month until it emerges that the UK is in recession. I believe the trend has been apparent for some time. The synchronized downturn in so many business surveys should have led us to realise sooner that the UK economy was entering a recession." --- BUT THE PROBLEMS WERE CAUSED BY LOW INTEREST RATES IN THE FIRST PLACE!!!

Posted by drewster @ 01:53 AM (273 views)
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3 thoughts on “Blanchflower says BoE should have cut rates sooner

  • Maybe borrowing costs should have been INCREASED earlier. 3-5 years earlier.

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  • I think this is a very easy route for economics commentators – throw out the lifeboats now, or you might regret it.

    Ship doesn’t sink – well it was a good job we had the lifeboats out just in case (so I was right).
    Ship does sink – well it was a good job we had the lifeboats out (so I was right).

    It should be observed however, that ships do not set sail with the lifeboats out, for good reason. Blanchflower is not the only guilty party here, but his plant in the MPC by Gordon Brown is one of the main reasons the MPC has lost control of LIBOR.

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  • Central banks are currently setting the cornerstones for future bubbles.

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