05 September 2013

Missing the point?

Much wailing and gnashing of teeth on the part of economists, with fingers pointing ominously at the governor of the Bank of England.  This in CityAM is not untypical:
COULD Mark Carney’s luck have already run out? Given that he has only been governor of the Bank of England since July, it may sound churlish even to ask such a question. But the timing of his revolutionary announcement that interest rates would stay on hold for three years – barring a spike in inflation or a bubble – is starting to look terrible. It was a signal that the economy remained weak, that it needed historically low interest rates for years to come and that normalisation could wait.
That might have made sense had the economy continued to flatline or grow by a few tenths of a per cent a quarter. But instead we have seen a flood of strong data over the past few months, culminating in yesterday’s astonishingly good services sector purchasing managers index, the best since 2006, taking the composite index for the entire economy to its highest reading since 1998. The economy remains riddled with structural problems but activity is bouncing back dramatically.
The real point, dear friends, is that the UK economy appears to be recovering.  It started when Mr Carney took up his post and has ever since intensified.  Rejoicing would seem to be a more appropriate reaction.  And, by the way, give the man a bonus ...

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