Wednesday, August 7, 2013

Wonk World Whacks Carney

The new Governor’s first big day at the office has gone down rather badly in wonk world: The IEA call it “the most dangerous development in UK monetary policy since the late 1980s.”:

“Monetary policy should be designed to ensure that we have stable prices. The level of unemployment is mainly determined by a range of factors such a labour market regulation, the benefits system, tax rates and so on. To try to use monetary policy to reduce unemployment when inflation is already above target is playing with fire and could lead us down the road that we followed in the 1970s. This move also calls into question the independence of the Monetary Policy Committee and the Bank of England’s ability to fulfil its statutory duties.” 

The Adam Smith Institute accused him of “fumbling in the dark”:

“Mark Carney had the leeway to make radical change here but he’s bottled it with baby steps… unemployment and inflation come from both aggregate demand (which the bank can control) and aggregate supply (which it has essentially no control over). Since neither of these numbers distinguish between changes in supply or demand, the Bank is still fumbling in the dark with its guesses over whether a change in inflation comes from demand (which means it should react) or supply (which means it shouldn’t). This means firms are still left guessing, and it means that uncertainty still reigns.”

Well that went well then.

Three More Years of 0.5% Interest Rate

Mark Carney has announced UK interest rates will be held at 0.5% until the unemployment rate falls to 7%, which is forecast to happen in late 2016.

Which will be nice midterm treat for whoever wins the next election…


Seen Elsewhere

From the IRA to Windsor Castle | WSJ
Coulson: Everything You Need to Know in 6 Seconds | MediaGuido
Mo Ansar’s Silence | Adrian Hilton
Gove Loses WWI Battle | Conservative Woman
5 Reasons Labour Likely to Win General Election | Sunny Hundal
Dave Surrounded By Topless Women | Sun
UN Loony says Britain Most Sexist Country | Sun
Farage is a Good Reason to Leave the EU | Dan Hannan
UKIP Blocked Expenses Questions | Times
NHS Showdown Coming | Paul Goodman
Sons of Brown | Telegraph


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Cathy Jamieson MP, Labour’s Shadow Treasury minister, commenting on Treasury analysis of the economic impact of tax changes…

“If the Treasury is looking at the economic impact of tax changes, then surely it should examine the impact of the rise in VAT and cuts to tax credits? George Osborne’s £12 billion VAT rise knocked confidence, helped to choke off the recovery and has cost families £1,350 over the last three years.”



orkneylad says:

What’s he been doing FFS, mining bitcoins?


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