Why the Bank is independent
The Bank of England has a delicate balancing act, it doesn’t want to cut interest rates until it is sure inflation is under control but then it knows that the longer they stay high the worse that is for the economy overall.
Luckily for it, the Bank of England’s remit is to bring inflation down to around 2%, a simple one off target.
Looking at that problem alone it is not clear that the Bank can afford to cut rates soon.
For a start CPI inflation is still well above target at 3.2%, but if you include housing costs it is 3.8%. The “core” figures which exclude booze and fuel etc and which give you a better idea of what is happening if you leave out factors that often fluctuate wildly and which the Bank has no control over, are well above 4%.
The government meanwhile is desperate to bring interest rates down, purely for electoral reasons; but then that is precisely why the Bank of England was given its independence, so that economic policy wouldn’t be in the hands of here today gone tomorrow political chancers.
Speaking of “gone tomorrow” I see that Liz Truss is back complaining that she was ousted by the forces of darkness or some such rubbish. The self confidence of a woman who cannot even give a speech without looking terrified and who’s economic policies were disastrous really does verge on the worryingly delusional.
She even wanted to get rid of the Governor of the Bank of England, because he was apparently an obstacle to her ambitions. God knows what the market reaction would have been to getting rid of the one man who was preventing the economy from imploding because of her economic fantasies. It does not bear thinking about.
Now she wants us to believe she was hard done by, betrayed and traduced. When in fact she is incompetent, ill informed, seemingly very badly educated and without any sense of her own very many limitations, let alone the rules of economics or politics.
Interest rates are best set by independent experts, we have now been doing it for 25 years or so and it works. Liz Truss is the perfect example of why it works and that alone is why she shouldn’t be allowed anywhere near the levers of power again.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.
By Jonty Bloom Media