View from City Road: A minute is a long time in economics

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The Independent Online
It was a brave thing to start publishing minutes of the Chancellor's meetings with the Governor of the Bank of England, but as yesterday's helping shows clearly, a great deal of water can flow under the bridge in the six weeks before they see the light of day.

Yesterday's minutes - for the meeting that took place on 4 May - are a case in point. The Governor said 'it seemed less likely (although still not impossible) that interest rates would need to be cut further. . . He concluded that there was no longer a clear bias towards easing policy, but also no case (at least for the present) for a tightening either'. The Chancellor broadly agreed.

But what of the next set of minutes, for the meeting held a fortnight ago? They are far less likely to be bathed in such a favourable aura of unity. The Governor must surely have taken a tougher line following evidence last month of robust growth in high street spending and an unexpectedly rapid acceleration in average earnings growth - both of which might be bad omens for future inflation.

Even a fortnight is a long time in economics, however. The meeting at the beginning of the next month may well conclude that May's evidence of growing inflationary pressures was premature. It will be months before inflationary fears can either be confirmed or firmly rejected to the markets' satisfaction. In the meantime bond and equity markets continue to flounder, hoping for the best but fearing the worst. Hey ho.

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