Wednesday, March 21, 2007
Not close at all
Posted by David Smith at 09:45 AM
Category: Thoughts and responses

People thought the Bank of England's March decision would be a knife-edge one, with at least two members of the monetary policy committee voting for a hike. In the event, none did, and one, David Blanchflower, voted for a cut. The minutes can be read here. Since then we've had yesterday's disappointing inflation numbers and a speech by Kate Barker that some have interpreted as hawkish. Confused? You should be, though if the Bank does hike in April or May it won't be the first time in recent months that the minutes have proved less than useful as a pointer.

Comments

I think the market is thinking along the same lines...ie questioning the information content of the minutes in light of the cpi print and recent surprise decisions by the MPC. That would help to explain why GBP has bounced back after significantly selling off when the minutes were published at 9:30.

Posted by: Caravaggio at March 21, 2007 11:40 AM

Kate Barker's got form on this - in her previous job as CBI economist one of the regular tasks was telling employers they shouldn't concede higher wages - and this morphs naturally into an MPC role when there is a possibility of second round effects via earnings. At the moment the earnings trends don't seem to be worrying but for an MPC member from that background it doesn't harm to sound tough.

Posted by: Paul Bivand at March 21, 2007 11:55 AM

So one MPC member voted for a rate cut, with inflation at 4.6% and rising? Is he living in the same country as us?

Oh hang on ...

Posted by: citydrone at March 21, 2007 02:06 PM
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