Wednesday, November 22, 2006
7-2 vote at the Bank
Posted by David Smith at 10:00 AM
Category: Thoughts and responses

It was always expected that there would be a dissenting voice in the Bank of England's decision to raise Bank Rate from 4.75% to 5% earlier this month. It was not expected that there would be two. David Blanchflower, who emphasises the extent of spare capacity in the economy, was joined by Rachel Lomax, the deputy governor responsible for monetary policy. She believes there are significant downside risks to the world economy and inflation. The minutes are here.

Comments

Funny how Blanchflower, ever the inflation dove, doesn't actually live in the UK, so doesn't need to worry about being able to afford to buy a house here.

Posted by: RichB at November 22, 2006 04:44 PM

He is of course affected by US house prices.... But he is not the only one who takes many factors into account other than house prices - they all do.

Posted by: paulbiv at November 22, 2006 05:23 PM

Blanchflower is just unbelievable. Gordon Brown plant by any chance?

Posted by: Kev M at November 22, 2006 09:10 PM

Why unbelievable? He's making the argument that rising unemployment tells us there's plenty of spare capacity in the economy. The earnings figures support him on that. It would be a sad day if the MPC presented a monolithic view, or just pandered to knee-jerk rate hawks.

Posted by: David Smith at November 23, 2006 09:58 AM

The economic stability of this country is being threatened by debt. Look at the amount of people who have borrowed too much and are now going into debt. If the BoE want to hold interest rates or cut them, they should ensure they stop printing money, and the government should stop the irresponsible banks from lending 5x multiple mortgages or 50K to persons already bankrupt.

Posted by: Kev M at November 24, 2006 01:12 PM

Correction:

The economic stability of this country is being threatened by debt. Look at the amount of people who have borrowed too much and are now going insolvent/bankrupt. If the BoE want to hold interest rates or cut them, they should ensure they stop printing money, and the government should stop the irresponsible banks from lending 5x multiple mortgages or 50K to persons already bankrupt.

Posted by: Kev M at November 24, 2006 01:34 PM

Actually it isn't, if you look at the figures on debt, and where the problem is concentrated - a relatively small proportion of people with unsecured debts. I din't know how much you know about the composition of debt (83% secured) and its relationship to household assets, but it is worth finding out. There's plenty of material on this on the Bank's website and in the latest inflation report.

Posted by: David Smith at November 24, 2006 03:50 PM