Sunday, September 17, 2017

Its not Carney you should consider..

Is the Bank of England running out of rhetorical firepower on interest rates?

Carney has bluffed to get the market to anticipate rate hikes thereby tightening for him, and has done so many times successfully as the article explains. As the BoE are truthfully in charge of setting the rate then if the market doesn't tighten on his behalf and he is forced to raise, they are wrong-footed, and if they do tighten in anticipation then the BoE does nothing. Its like being a successful blackmailer. Where this cunning plan breaks down though is if inflation starts breaking out outside of the financial markets i.e. wage inflation. I have often wondered for all the CPI, RPI talk, the only thing they ever consider is wage inflation, because all of the data on wage inflation is to hand direct from inland revenue, and if wages aren't going up then neither are prices.

Posted by stillthinking @ 12:07 PM (4291 views)
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