Thursday, February 10, 2011
Too soon for the Bank
Posted by David Smith at 12:30 PM
Category: Thoughts and responses

It would have been a surprise if the Bank of England had hiked interest rates, though not a shock. The monetary policy committee held Bank rate at 0.5% and kept quantitative easing at the existing 200 billion. Some will see the Bank as brave for resisting pressure for higher rates while the economy is still fragile. Others will say the Bank ducked starting the process of normalising rates in the face of high inflation.

The Bank will have known next week's inflation figures and will publish its February inflation report on Wednesday. Don't forget that its forecasts will be conditional on the path of market interest rates, which imply a gradual rise. In two weeks time we will get the minutes. Did anybody join Andrew Sentance and Martin Weale in voting for a hike. Maybe. But we'll see.

Earlier, official figures showed manuafcturing output slipped by 0.1% in December, while overall industrial production, boosted by energy, rose by 0.5%. The 12-month increases were 4.4% and 3.6% respectively. More on what appear to be another set of snow-affected figures here.