Tuesday, September 18, 2007
August 2005 vindicated?
Posted by David Smith at 04:00 PM
Category: Thoughts and responses

The much-criticised August 2005 Bank rate cut from 4.75% to 4.5%, when Mervyn King was outvoted in a 5-4 vote, has been blamed for plenty of things. On the narrow point of achieving the desired inflation outcome in two years, which after all is the monetary policy committee's remit, it is hard to fault, however. This morning's inflation figures, showing a further drop from 1.9% to 1.8%, suggest the doves were on the ball. Details of the inflation figures here - the only glitches were a rise in headline RPI inflation from 3.8% to 4.1% (the mortgage rate effect) and the fact that RPIX inflation, at 2.7%, is still above its old 2.5% target.