Shelf life

This blog will have a short shelf life, as the Bank of England is announcing its interest rate decision at 1200. I don’t know which way it will go but it is a difficult call.

For a start headline inflation is down to its target again after 3 years, but then there are underlying pressures in the system that are not so benign.

On the other hand the economy could really do with falling interest rates, growth is very weak and people are suffering.

But the Bank knows that the government will claim a cut in rates is an endorsement of its economic policies, which it isn’t, and will do so just weeks before the polls open. That really shouldn’t influence the MPC, nor should the fact the Rishi Sunak lies every time he tries to take credit for bringing down inflation himself. Although it must be bloody annoying.

So it will all come down to whether inflation is really under control or whether it needs another month of high rates, just to be sure.

But the wider and longer point is that Labour will inherit an economy set for a period of falling and then low interest rates, which is nice and with a bond market that doesn’t seem that bothered if the government borrows a bit more.

A little bit of room for manoeuvre is opening up for the winner of the election. It is not much, it is not going to mean sustained higher growth rates of the type we used to enjoy and which should be standard for the British economy.

But it is a better start than they might have expected.

Jonty’s Jottings

Economics, trade and Brexit, not necessarily in that order but the dog always comes first.

By Jonty Bloom Media