Today, like Blackadder, governments find themselves financially embarrassed, laden with debt. Central banks, unlike the Baby-eating Bishop of Bath & Wells, are not armed with a red-hot poker to bring delinquent treasury ministers to heel but they too are finding that cowpats litter their own path to containing inflation. As for blackmailing the bank manager, however tempting, best not to unless a trip to the Tower is your aim.
It has been a busy week for economic data. It was a veritable mixed bag, some of it perplexing and seemingly contradictory.
This contradictory data of an economy flirting with recession, unemployment creeping up but wages still stubbornly high and real wages increasing poses a challenge to the Bank of England’s Monetary Policy Committee which meets next week. As tends to happen in such situations of uncertainty, committee members cannot resist the temptation publicly to fly personal kites ahead of the meeting to steer opinion of what they think ought to happen. The Governor is already on record as saying UK interest rates are at or near their peak; Catherine Mann, a natural policy hawk, said recently that while the headline economy might be flat-lining, the rate of inflation is still far too high despite the Bank consistently raising interest rates since December 2021, from rock bottom to 5.25% today: she advocates that failing to kill inflation now through further rate rises now will only prolong the agony later. Meanwhile, Huw Pill, the Chief Economist, is on record saying that the risk of over-tightening could cause unnecessary long-term economic damage and that to pause now is the correct solution. We will know soon enough (Thursday, 21 September), though it is the subsequent publication of the minutes which reveals the extent of the debate and dissent or consensus in reaching the decision.
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