There were few surprises in yesterday’s Bank of England monetary policy committee minutes, save the reservations of Martin Weale who broke the early unanimity that had been harnessed by new governor Mark Carney.
A 9-0 vote at both meetings the governor has attended, with regard to holding interest rates and quantitative easing had ensured a smooth start for the new man at the helm and indicated that he had broad support.
However, Weale was the sole dissenter on the new “forward guidance”, yet he could prove to be the Lee Cobb of 12 Angry Men movie fame who eventually persuades his fellow “jurors” to support his lone view.
Weale believes the timeframe for reining in inflation is too long. A shorter period would provide an option for a rise in interest rates and there are those who believe it likely that inflation will rise above the 2.5 per cent threshold over Carney’s 18 to 24 months horizon.
But much will depend on the strength of the recovery, Should growth pick up firmly over the time frame there is more chance of a rate rise on the back of rising inflation. There are, however, sceptics who feel talk of a strong rebound is overdone.
The unemployment rate remains at 7.8 per cent, against a targeted 7 per cent, and forecasters are split over the direction it will take, though the weight of opinion forecasts a fall and probably more quickly than predicted.
The numbers are therefore offering support for Weale’s argument. Forthcoming meetings of the MPC will determine whether his eight colleagues share his view.
Buy British policy will aid economic recovery
the more recent data on manufacturing reveals there is a growing demand for British-made goods.
It is an echo of past moves to stimulate UK industry, made famous by the I’m Backing Britain campaign in the 1960s. Except this time there is no official campaign, just a self-driven desire by companies to buy British.
Last month John Lewis became the latest retailer to throw its weight behind British manufacturing. .
Sir Philip Green plans to get more British-made garments into his Topshop empire while furniture retailer DFS has increased its UK production by about a quarter in the past three years.
The latest sector to note a renewed focus on British-made goods is the fashion and textiles industry which notes that the reputation of British designers is at an all-time high.
It is an important element in stimulating exports and for this sector alone the value of overseas sales has risen by 37 per cent in the past five years.
Bad plan to break up Royal Bank of Scotland
oppositiion to splitting up the Royal Bank of Scotland is growing, and rightly so. As Fitch, the rating agency says in our main story, it would be a costly and complex procedure with little benefit.
The bank has done all the heavy-lifting in terms of cleaning up its balance sheet and reducing the toxic assets to a manageable figure.
Even so, whether Rothschild’s review supports a split or not it is unlikely to happen as the minority shareholders - mainly institutions - are opposed to the idea. It will be they who will decide because for conflict of interest reasons the government will not be allowed to vote.