Random Thoughts on The City, Wall St & Capitalism

Why do we have the MPC? As tax payers we contribute a lot of cash to keep the treasury in the style it has become accustomed to, but do we get value for money? We let the MPC do what it wants as long as it makes a measured judgement. We fly members in from the US once a month ( Blanchflower) because presumably there aren't enough talented academic economists in the UK to fill a place up at the MPC. The Bank of England is supposed to be independent, in part I would think this also required some courageous and independent decision making which it seems unable to perform. The decision to keep interests on hold yesterday was clearly wrong. Inflation is increasing, personal debt including unsecured lending is over a trillion, house prices in real terms are still going up, commodity prices are volatile to say the least. The reluctance of the MPC to increase rates sooner rather than later is odd. After all whether they put rates up now or in November it doesn't matter for all practical purposes. The MPC seem to dither an awful lot, which is amazing given the unambiguous nature of the data suggesting rates must rise. Instead the vacillation is somewhat inexplicable. Compare this to Jean Claude Trichet's decision yesterday at the ECB. He doesn't mess around. The delay in raising rates means that when the landing happens, it's unlikely to be soft.Mervyn King better start drafting his letter to the Chancellor soon. Can someone please post him a pad and pen.

RB