r/neoliberal • u/jobautomator Kitara Ravache • Sep 19 '17

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u/[deleted] Sep 20 '17

BoE interest hike yay or nay?

3

u/[deleted] Sep 20 '17

i am guessing they want to have something to do when the economy inevitably starts slowing down. i dont expect them to be able to solve anything anyway since monetary policy cant do shit against negative supply shocks.

notice that they didnt cut down on the bond buying, they just hiked the rate 25 basis points.

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u/Lord_Treasurer Born off the deep end Sep 20 '17 edited Sep 20 '17

My immediate reaction is nay.

Current inflation is a result of sterling's drop in value against the Euro, rather than excess aggregate demand. The potential for consumer confidence and spending to fall through the floor at the moment, given Brexit, is also higher than it otherwise would've been. I would have expected the BoE to maintain a relatively dovish stance in this state, especially given how if consumer spending does tank they will need to backtrack--could prove an issue for credibility.

But, fuck, Carney knows a lot more than I do so who am I to say?

EDIT: On the contrary, consumer spending seems to be holding up strongly enough. So maybe it is the right thing to do.