WHEN David Miles joined the Bank of England’s Monetary Policy Committee in August 2009, interest rates were at a record low of 0.5%. They have not budged since. Not once during his tenure, which comes to an end on August 31st, has Mr Miles voted for a change in rates. In his time he has been called a “dove”, and even an “arch-dove”. But in his final speech as a member of the Monetary Policy Committee (MPC) on July 14th, he shrugged off this label, suggesting that rates should rise gradually, but soon.
His speech came on the same day that Mark Carney, the bank’s governor, also suggested that the time for a rate rise is “moving closer”. The governor’s comments caused sterling to jump 0.7% against the dollar.
Most economists have been expecting the Bank of England to wait for America's Federal Reserve to raise raistes before taking action itself, for fear of causing a surge in the pound and immediate deflationary pressure. Inflation was exactly zero in June, well below the bank's two percent target. Were the bank to move first and the pound to appreciate as a result, it could be pushed further off-target in the...Continue reading
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