Tuesday, Jan 15, 2013

BoE gets more choices under the 'Do nothing' option

Grauniad: Bank of England gets sweeping powers to prevent next house price bubble

So as we approach the 3rd anniversary of the last change in interest rates the BoE is to get more options to do nothing? They've not used the biggest option they've had for 3 years so now there get some more to tinker with.
All sounds very nice and prudent but then hindsight commonly is..

Posted by richy richless @ 12:41 PM (1275 views)
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1. paul said...

The Bank of England had sweeping powers to prevent the last housing bubble. They decided not to exercise them and instead hitched a lift on the easy ride, only later admitting that they "didn't really understand what was going on".

In August 2005 they lowered interest rates even though inflation had just risen, primarily to chase the housing market up a mountain of their own making, egged on by arch doves like Danny Blanchflower.

Is the hope that by giving them more power, the Bank might magically acquire better judgement in applying it? Like giving an alcoholic the keys to the brewery in the hope that they'll become abstemious.

So what's changed now?

Tuesday, January 15, 2013 10:20PM Report Comment

2. taffee said...

spot on.....I'm fascinated to see the consequences of whats going on.....there must be,otherwise money printing and low interest rates is the new economic miracle

has to be japan doesn't it?...zombie banks, zombie companies and deflation

they excluded almost everyone from credit,then were surprised people didn't buy much...they saved and then after they had enough they realised they had done without said item..and it was cheaper...so they kept saving

Wednesday, January 16, 2013 04:54PM Report Comment

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