Stop Cutting Interest Rates, Say Monetary Economists
There are widespread calls in the media for interest rate reductions, but SMPC members argued that credit conditions were already too loose. A further reduction would be inappropriate. Some members were particularly worried that a further reduction would fuel inflationary risks in the medium term.
Members also expressed concern about the increasing tax and regulatory burdens in Britain, which risked undoing the supply-side reforms of recent years and had already raised the ‘natural rate’ of unemployment.