In case anyone was suffering under the illusion that the Bank of England was focused on price stability, MPC member Andrew Sentance helpfully clarified the matter in a recent speech:
“Over the last nine months, the Monetary Policy Committee has been focussed on providing support to demand – through dramatic and unprecedented cuts in interest rates over the autumn and winter – and more recently through our current policy of “Quantitative Easing”.
This programme of substantial asset purchases aims to boost the money supply to support spending in the economy, going beyond the stimulus that can be provided by very low interest rates.
I am confident that these policies will help to support economic recovery – through their effect on asset prices, financial conditions and ultimately spending by households and firms.”
It all comes down to one simple point: the MPC have cut rates to almost zero and started printing money to inflate house prices.
Thanks for that, Andrew.