Bank of England edges towards a rate cut
1 February 2024
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In the Media
Shadow Monetary Policy Committee referenced in The Express
1 February 2024
In the Media
Julian Jessop quoted in The Telegraph
2 February 2024
Housing and Planning
Commenting on the Bank of England Monetary Policy Committee’s (MPC) decision to hold Bank Rate at 5.25 per cent, Julian Jessop, Economics Fellow at the free market think tank, the Institute of Economic Affairs, said:
“The Bank of England’s Monetary Policy Committee may have left interest rates on hold this week, but this is still a turning point.
“Indeed, one member of the MPC voted for a cut. Swati Dhingra’s points about the lags in monetary policy – and the risks that monetary policy is left too tight for too long – echo warnings from the Shadow Monetary Policy Committee that meets at the IEA.
“The Bank has at least acknowledged that inflation is on track for the two per cent target in the spring and that the risks thereafter are more balanced, so it is even less likely that rates will be raised again.
“But the consensus on the MPC is still that policy will have to remain ‘restrictive’ for a while yet, so the first cut will probably not come until May, alongside the next set of Bank forecasts.
“Hopefully, this will be a case of better late than never.”
ENDS
Notes to Editors
Contact: media@iea.org.uk / 07763 365520
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
“The Bank of England’s Monetary Policy Committee may have left interest rates on hold this week, but this is still a turning point.
“Indeed, one member of the MPC voted for a cut. Swati Dhingra’s points about the lags in monetary policy – and the risks that monetary policy is left too tight for too long – echo warnings from the Shadow Monetary Policy Committee that meets at the IEA.
“The Bank has at least acknowledged that inflation is on track for the two per cent target in the spring and that the risks thereafter are more balanced, so it is even less likely that rates will be raised again.
“But the consensus on the MPC is still that policy will have to remain ‘restrictive’ for a while yet, so the first cut will probably not come until May, alongside the next set of Bank forecasts.
“Hopefully, this will be a case of better late than never.”
ENDS
Notes to Editors
Contact: media@iea.org.uk / 07763 365520
- The Shadow Monetary Policy Committee (SMPC) is a group of independent economists whose purpose is to monitor the decisions of the Bank of England’s official Monetary Policy Committee and make its own policy recommendations. The minutes of its January meeting can be found here: Minutes of the SMPC meeting of 9th January.
- Julian explained the link between inflation and the growth of Broad Money in a September 2023 article for The Spectator. Read the piece here: Is printing too much money the real cause of inflation?
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
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