The Bank of England's Monetary Policy Committee has just announced that they'll stretch the elastic a little bit further (see previous post for explanation of this highly technical term).
Which is completely out of step with popular opinion. On a healthy turn-out of over four hundred votes (thanks to Alice Cook for linking and everybody at HPC), the responses to the question:
What should the Bank of England's Monetary Policy Committee do at its next meeting?
were as follows...
Disband itself and allow the markets to set interest rates - 43%
Increase the base rate - 35%
Keep the base rate at 1.5% - 11%
Cut the base rate - 11%
I doubt whether either of the first two options will show up as having been seriously considered on their minutes, once they get round to publishing them. Although, the two extremes ('cut' and 'disband') come to the same thing - if they reduced the OBR to zero, then banks are far less likely to deposit with the Bank of England and would set rates themselves 'in the market' - the OBR would become an irrelevance.
Thursday 5 February 2009
Fun Online Poll Results: Bank of England has lost the plot
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2 comments:
I voted to increase the base rate. Can I change this to disband the MPC please? From the FT:
In a statement accompanying the latest decision the Monetary Policy Committee warned there was “substantial risk” that despite significant economic and monetary stimulus, demand is so weak that inflation will undershoot the Bank’s 2 per cent target.
Funny how they haven't been very concerned about inflation overshooting the 2% target for the past year or so (never mind the stupidity of targeting CPI rather than RPI in the first place). If anything, I would like them to force deflation to restore the value lost by savers.
We have to think positive - maybe this crisis is chance to get rid of that nonsense called central banking, created to fund king's war some centuries ago. I believe it would be the beginning of booming era never seen before .)
Lorne
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