Trends survey sets seal on rates inaction
Wednesday 26 July 1995
The position of Eddie George, the Governor of the Bank of England, is more complicated. Since he first advised higher interest rates to keep inflation on target at the beginning of May, most of the evidence has gone against him. Sterling has stabilised, output growth has slowed and the frightening bulge in the inflation pipeline looks to have reached its limit. Mr George will by now have a new Bank of England inflation forecast taking these developments into account. It is expected to be a bit less gloomy about inflation than May's forecast, and will give him an excuse for backing down if he wants to.
Should he back down? It is beyond doubt that growth has slowed and will slow further. But GDP in the second quarter was still expanding at a little more than its trend rate, even if lottery fever and financial services rather than manufacturing were the engine. Moreover, the Bank's job is to advise after assessing prospects for meeting the inflation target. It will probably still forecast a breach of the 2.5 per cent target and a climb towards the 4 per cent outer limit next year.
Few people in Britain think such a low inflation target is really, truly desirable. Emotionally, we are all with Ken Clarke. We don't want to hammer those Midland manufacturers or distressed homeowners. That is why the Chancellor gets the final say on interest rates, so he can balance growth against the inflation target. But do not expect Mr George to change his mind. He is, after all, a central banker, not a bleeding-heart Tory politician.
- 1 Michael Douglas regrets 'embarrassing' Catherine Zeta-Jones with oral sex comments
- 2 Tunisia hotel attack: Locals form 'human shield' to protect hotel from gunman Seifeddine Rezgui
- 3 Tunisian builder has been hailed a hero after knocking gunman to the ground with roof tiles
- 4 German ethics council calls for incest between siblings to be legalised by Government
- 5 Fifty Shades of Grey author E.L James's Twitter Q&A didn't go exactly as planned
Michael Douglas regrets 'embarrassing' Catherine Zeta-Jones with oral sex comments
Kim Jong-un shows off airport designed by architect he likely had executed
Tunisia hotel attack: Locals form 'human shield' to protect hotel from gunman Seifeddine Rezgui
Ex-Scientologist Carmen Llwyelyn blasts 'cult' and her treatment after divorce with Jason Lee
Tunisian builder has been hailed a hero after knocking gunman to the ground with roof tiles
The moment a Queen's Guard soldier lost it and drew his gun at annoying tourist
Greece crisis: The wider lesson is that it’s time to abandon this failed experiment in currencies
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Extend Right To Buy to tenants of private landlords, Labour's Jeremy Corbyn says
David Cameron struck double blow in his hopes to win Britain a new EU deal
Pentagon accuses Russia of 'playing with fire' over nuclear threats towards Nato
iJobs Money & Business
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...
£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...
Negotiable: Recruitment Genius: This extremely successful and well-established...
Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...