Thursday, 31 July 2008

MPC member says something sensible about inflation

At last, we have an indication that there is someone on the MPC who is beginning to understand the inflationary threat. MPC member Timothy Besley said price pressures warranted a "mildly restrictive" monetary policy, such that the level of interest rates bears down on the economy.

He also said that "We've found in the past that once inflation gets significantly out of control, it's extremely difficult to bring it back." If is, of course, pointing out the blindingly obvious, but nevertheless, it is good to hear it.

With the inflationary threat rising, the UK needs a couple of healthy interest rate hikes. What about a 50 basis point hike at the next MPC meeting. Go on, Tim, you know it is the right thing.


MAB said...

The outrage over 5% CPI inflation in the U.S. is non-existent. Things are likely to get worse as PPI & import price inflation measures have been running significantly higher than CPI inflation measures.

Where is the outrage from investors and consumers? Darn it if I know. My best guess is that so many have so much debt that they would prefer government handouts and inflation over hard work and thrift. Very troubling.

Mark Wadsworth said...

As a sell-to-renter, from a selfsih personal point of view, interest rates can't go high enough. From what little I know of macro-economics, I don't think inflation is going to be a problem, but, better safe than sorry, I suppose.

Oldftb said...

"What about a 50 basis point hike at the next MPC meeting"

What are you trying to do Alice? Trash the UK housing market or something?

It's creaking at the seams as it is!

Alice Cook said...


The housing market needs no help from me. It will go where it needs to be.

I would much rather the MPC focus on price stability, which in my view, needs a few more interest rate hikes.


hatfield girl said...

Inflation is the only way out of those unfunded pension commitments, unless we are going for the dramatic, and repudiation of public employees' pension claims.