Wednesday, May 17, 2006
Talk of higher rates as unemployment rises
Posted by David Smith at 10:15 AM
Category: Thoughts and responses

Last week's Bank of England inflation report has been followed by the first genuine stirrings of the interest rate hawks, and the first three-way split on the monetary policy committee for a long time. While Steve Nickell bowed out from the committee still voting for a cut, David Walton, one of its newer members, supported a rise. The split was thus 6-1-1. Minutes here.

Unemployment, however, continues to increase, and was up by 44,000 in the three months to March, while the claimant count rose by 7,700 in April. Will the Bank hike rates at a time of rising unemployment? It could, as long as employment (up 127,000 in the latest quarter) continues to rise.

Comments

I see that new figures released by the Institute for Fiscal Studies indicates that poverty levels have risen under the current government.

What's more eyebrow raising is Mr Brown's inevitable answer - "recalculate" the measure for poverty.

On the bright side, it's (kind of) worked for inflation so far, although I think that a loss of further credibility and a devalued pound could be the side effect of tweaking these measures.

Springtime for Gordon appears to have skipped summer and given way to a rather chilly autumn. Oh dear.

Posted by: Paul Owen at May 17, 2006 01:45 PM