Wednesday, January 7, 2009

Why the Bank would be wrong to cut interest rates to 300-year record low

Why the Bank would be wrong to cut interest rates to 300-year record low

An article giving views on why the BOE would be wrong to cut interest rates tomorrow. Following the Fed towards a zero interest rate policy is wrong for three reasons. Cutting rates again is an error firstly because it will continue to miss its principal objective of kick-starting the economy, secondly because it is storing up inflationary problems for the future and thirdly because it is rewarding precisely the kind of behaviour which landed us in this mess in the first place.

Posted by johnny @ 08:45 PM (773 views)
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2 thoughts on “Why the Bank would be wrong to cut interest rates to 300-year record low

  • “Following the Fed towards a zero interest rate policy is wrong for three reasons. Cutting rates again is an error firstly because it will continue to miss its principal objective of kick-starting the economy, secondly because it is storing up inflationary problems for the future and thirdly because it is rewarding precisely the kind of behaviour which landed us in this mess in the first place”.

    I think the paragraph is pretty compelling. It sums things up nicely!

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  • alan, you can’t reason with a short term career politician in a panic to save he’s own skin.

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