Martin Weale, an external member of the nine-strong Monetary Policy Committee, backed the core proposal of “forward guidance” but wanted to strengthen one of the three “knockouts” that over-rule the unemployment target and force the committee to consider rate rises.
Government borrowing costs edged higher and the pound strengthened after the split emerged, as it reinforced speculation that rates could rise sooner than 2016, as the Bank has signalled. The eight other members voted entirely in favour of the Governor's plan, which they hope will drive the recovery by giving households and small businesses reassurance that their borrowing costs will not rise for years.
Mr Weale objected to the committee’s pledge to drop the unemployment commitment if inflation was forecast to overshoot the Bank’s central 2pc target by half a percentage point over “18 to 24 months”. Instead, he wanted the over-rule to kick in earlier to prevent any risk the new policy would allow prices to spiral out of control.
The minutes to the meeting said that “one member [Mr Weale], while accepting the principles of forward guidance, saw a particularly compelling need to do more to manage the risk that forward guidance could lead to an increase in medium-term inflation expectations, by setting and even shorter time horizon”. Read on and comment » | Philip Aldrick, Economics editor | Wednesday, August 14, 2013
I know I'm going to be shouted down for saying this, but quite honestly, I wonder whether Mark Carney really knows what he's doing! He certainly has no understanding of many basic things: that people with savings are not going to be able to help boost a recovery because they'll be strapped for cash; that by keeping interest rates extremely low for a significant period of time, it will encourage more people to go into debt; that saving is a legitimate, desirable and essential activity in a normal-functioning, healthy capitalist economy; that a nation of savers is good for a stable economy (consider Switzerland); and that his determination to keep interest rates very low for a long period will push many people into benefits in the future and will ensure that our children will have far less to inherit in years to come.
He also doesn't seem to comprehend that it is well-nigh impossible to say in advance that interest rates will remain low for several years ahead, given the vicissitudes of the market. Further, does he realise that with the current influx of immigrants into this country – legal or illegal – it is going to be years away before an unemployment level of 7% will be achieved. And that doesn't even touch on the housing bubble he is helping to create.
Although Mark Carney hasn't been in his job for very long yet, I am sure I speak for many when I say that so far, I have been singularly unimpressed with his policies. Is this man, perhaps, just a smiler with a bit of charisma? – @ Mark
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