Forward guidance [Re: Why the governor’s monetary revolution will eventually backfire, yesterday] There is a serious flaw in the plan to use unemployment as a threshold for interest rate rises. The whole of the (first or second language) English- speaking working population of the EU can, through unrestricted EU migration, potentially qualify for inclusion in the UK unemployment figures. Given this, I cannot envisage the UK figure dropping sustainably below the 7 per cent unemployment rate. How can such an open-ended own goal be a creditable criteria for efficient monetary policy and interest rates? Colin Laverick Bank of England governor Mark Carney’s new policy may lead to inflationary problems. The Monetary Policy Committee has effectively moved away from its target of 2 per cent inflation to a new target of 2.5 per cent, based on its dubious projections for inflation in two years’ time. However, the Bank consistently underestimates the actual rate of inflation in its predictions – on average by about 2 per cent in recent years. By adopting this new regime, Mark Carney has effectively set a target of 4.5 per cent inflation for the UK. Over the course of three years, anything close to this rate would destroy the wealth of savers and pensioners. Peter Comley ……………….. BEST OF TWITTER As Mark Carney tries to loosen UK monetary policy, sterling surges to US $1.55 to effectively tighten it. @notayesmansecon Why do politicians boast about low rates? How is it meritorious to punish thrift and reward debt? @DanHannanMEP Conventional wisdom that we should fear China’s strength is wrong, we should fear its weakness. @mjhsinclair Weekly US unemployment figures keep improving. Odds for September QE tapering keep growing. @schwartztrends
Thursday 8 August 2013 8:34 pm
Letters to the editor - 09/08 - Forward guidance, Best of Twitter
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