Insurrection at the Bank of England
First the Fed, now the B of E:
Spencer Dale, the Bank of England’s Chief Economist, is joining hawkish bankers Andrew Sentance and Martin Weale. The three have voted for an interest-rate increase.
The debate is (of couse) over inflation, and like the Fed, the B of E is now threatened with splitting into two camps: A Weak Economy/Deflation bankers vs the Fear of Inflation Bankers.
“For three members, the case for removing some monetary stimulus at this meeting was compelling,” according to minutes of the Feb. 10 decision published today in London. “Of those members not favoring a rise in bank rate, some thought that the case for an increase had nevertheless grown in strength.”
Among members pushing for the first interest-rate increase since July 2007, Dale and Weale voted for a 25 basis-point move from the record low of 0.5 percent, while Sentance increased his call to 50 basis points. Adam Posen maintained his vote to add 50 billion pounds ($81.2 billion) to the bank’s 200 billion- pound bond-purchase plan. The other five members voted for no policy changes. The pound rose after the minutes were published.”
Must be nice to have an appreciating currency when you travel — where I am, I get two Bajan dollars for each American greenback — but the Brits get 3 Bajans for every pound.
Hence, the island is mostly Brits and Canadians. Us Yanks are few and far between…
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Source:
Dale Joins Sentance, Weale in Push for BOE Rate Increase
Svenja O’Donnell and Jennifer Ryan
Bloomberg, Feb. 23 2011
http://noir.bloomberg.com/apps/news?pid=20601087&sid=agt8pgTzRfZ0&pos=1
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February 23rd, 2011 at 6:59 am
Of possibly more importance is the campaign against Mervn King. He has Volcker’s philosophy and wants serious bank reform. Being trashed by Barclays, etc and some people in the government because he won’t play ball with like American regulators did.
February 23rd, 2011 at 8:58 am
The MPC are becoming like Celebrities:
http://www.mindfulmoney.co.uk/3408/investing-strategy/rate-rise-not-over-till-the-last-mpc-member-sings.html
You have to look at the facts and then decide if rates should increase or not. The members seem to be celebrities now. Andrew Sentence is on all TV channels and newspapers calling for a rate rise, to the point of obsession.
These guys are sticking there necks out in order to make a name for themselves whilst knowing full well that the others will vote for the rates to stay the same.
We had a 1.1% growth in GDP last year at this time and the MPC voted 9/0 in favour of rates to stay the same. We have just had 0.5% contraction and they want a rate rise.
If they are worried about inflation and are not gonna take into consideration anything else. Why have the MPC, Why not have computer that tracks inflation, inflation rises then interest rates rise and vice-veraa.
Not over till the last MPC member sings!
February 23rd, 2011 at 9:19 am
“Must be nice to have an appreciating currency when you travel — where I am, I get two Bajan dollars for each American greenback — but the Brits get 3 Bajans for every pound.”
Oh how short our memories are. Back at the start of 2008 a British Pound would buy 2 American Dollars, and then the financial system imploded and the pound fell by 30%. The pound may be appreciating compared to the US dollar, but it’s still down 20% from its 2007 highs.
February 23rd, 2011 at 11:54 am
Hope springs eternal!
February 23rd, 2011 at 12:19 pm
@BR: Now we know where you are.
Great choice.