The Week in Review – rates on hold, manufacturing output is flat and manufacturing costs are rising. Plus we discuss financial repression what is it and how will it affect you. Download the PDF The Saturday Economist 10th March 2012.
On Thursday the Bank of England announced that base rates would remain on hold
and there would be no increase in the asset purchase programme beyond the £325
billion already announced. No real surprise in that, though the prospect of QE 4
remains a distinct possibility.
At the pro.manchester Business Conference last week, I did a short piece on what’s
wrong with economic policy at the Bank of England. The Governor had suggested at
the presentation of the February Inflation Report – “what we’re doing at present by
easing monetary policy is to try to persuade people to bring forward spending from the
future to the present, from next year to this year”. Of all the interpretations of the interest rate transmission mechanism (and there have been many) this was a new one for me.
As for Bank policy this had not been a good week for the little old lady :
The NAPF had claimed falling gilt yields have pushed final salary pension funds £90 billion deeper into the red since the second wave of quantitative easing (QE) started last October bringing the total deficit to £190 billion..
Manufacturing prices had ticked up as a result of energy and oil prices suggesting the
inflation target may yet prove elusive this year. And manufacturing output had increased by just 0.3% year on year in January, so much for the march of the makers rebalancing the economy. Yes I said it again!
Plus we touch on financial repression – what is it? and how will it affect you.
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