MPC Landslide
At first glance it would appear that the August MPC minutes, published today, show that the voting for a 0.25% interest rate increase went with a landslide win for the hawks, the votes being 6-1 in favour. However it seems that some news organisations have taken the wording of the minutes to mean that further rises are all but ruled out in the near future, the FT choosing to predict that “the last Bank of England monetary policy meeting revealed little possibility of another rate increase in the near term.” The sagely newspaper with the crystal ball obviously will have further scope to report that the next rate rise is a “huge shock” based on these obvious dovish noises coming out of the Bank. They have of course chosen to ignore last weeks inflation report, in which the Bank virtually spelled out its plans on interest rates, indicating that future rises were inevitable. Bloomberg chose a slightly more sensible line, their chosen interviewee commenting that “we’re going to have to see a lot softer data to dissuade the monetary policy committee from raising again”. Interestingly the only MPC member to vote against the August hike was David Blanchflower, the most recent member to have been recruited by Gordon Brown, and therefore obviously the member most keen to impress his new boss (Brown, not Mervyn King).
Elsewhere the doom and gloom for Brown’s miracle economy seems to continue on a daily basis, with the news that Gordon’s fiddled unemployment figures (which have widened the definition of “unable to work” to encompass more people than ever before) have hit a new high of 5.5%, the highest in six years. Previously the remedy to this situation would have been to add more civil service jobs to absorb the rise in genuine unemployment, but unfortunately the cash to support this tactic is fast running out, so Gordon will have to sweat a little more on his coronation instead.
It is also starting to look like recent news that CPI has actually fallen by a miniscule amount may be about to backfire on Gordon, as the Telegraph questioned how this could ever be possible given the rampant way in which energy prices continue to rise and rise. The article spells out the blatant inconsistencies in the clearest possible way without pulling any punches whatsoever:
But despite the increase in the cost of energy, the weighting given over to gas and electricity bills in the CPI have not risen by the same degree. The breakdown of the official “basket” of goods in the inflation measure shows what we spend on gas bills is up by 17pc and our spending on electricity is up by 7pc since 2003. But, the ONS’s own numbers show the cost of these bills has risen by 64pc and 45pc respectively in the same period.
Hmmm .. surely some mistake Gordon?
