Bank of England rate increase not the remedy for supply shocks
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Shadow Monetary Policy Committee quoted by The Negotiator
The IEA’s Shadow Monetary Policy Committee’s concerns over the Bank of England’s consecutive interest rate increases have been quoted by The Negotiator.
The Negotiator wrote:
“The Institute of Economic Affairs’ Shadow Monetary Policy Committee (SMPC) said this morning that further rate increases could harm the UK economy.
“One member, economist Patrick Minford (Cardiff Business School, Cardiff University), said that getting inflation down from very high levels will be a long and slow process; and overreacting and over-tightening could damage the economy and spark a financial crisis.
“While another member, Juan Castañeda (Vinson Centre, University of Buckingham), highlighted the contracting money supply over recent months that will have a strong disinflationary pressure. The SMPC was among the first groups to warn that loose monetary policy during the pandemic necessitated higher interest rates in July 2021.”
You can read the full article here.
The SMPC comment was also mentioned in Politics Home. The SMPC’s full meeting minutes can be read here.
The Negotiator wrote:
“The Institute of Economic Affairs’ Shadow Monetary Policy Committee (SMPC) said this morning that further rate increases could harm the UK economy.
“One member, economist Patrick Minford (Cardiff Business School, Cardiff University), said that getting inflation down from very high levels will be a long and slow process; and overreacting and over-tightening could damage the economy and spark a financial crisis.
“While another member, Juan Castañeda (Vinson Centre, University of Buckingham), highlighted the contracting money supply over recent months that will have a strong disinflationary pressure. The SMPC was among the first groups to warn that loose monetary policy during the pandemic necessitated higher interest rates in July 2021.”
You can read the full article here.
The SMPC comment was also mentioned in Politics Home. The SMPC’s full meeting minutes can be read here.
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