Friday, October 31, 2008
Blanchflower says BoE should have cut rates sooner
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!!!