Last Friday the FT’s economics editor Chris Giles took issue with the use of “the Niesr chart”, so-called because of its frequent publication by the National Institute of Economic and Social Research, to show what’s happening with the UK economy.
Chris argued that the Niesr chart, which shows that — in GDP terms — the current recession is the longest and the deepest since the 1930s, “may well be showing us irrelevant nonsense”.
Though output is now almost 4 per cent below where it was in 2008, the latest employment figures – out today – show that there are more jobs around today than before the crisis began. And this, Chris argued, meant that neither the Niesr chart nor the employment data should be used alone to illustrate what has happened to the UK economy in recent years.
External Monetary Policy Committee member Ben Broadbent has some sympathy with this view. In a speech today, Mr Broadbent argued that, because of the disparity between what the output figures and the jobs data tell us, policy makers “may be less confident than usual” about whether the origins of a change in the GDP result from a supply shock (which monetary policy can do little about) or weak demand (which monetary policy is supposed to address). Read more
Commuters pass the Bank of England. Image by Getty
As expected, the Bank of England today kept interest rates on hold at 0.5% and opted not to print more money.
Analysts’ attention has long focussed on the Monetary Policy Committee’s May meeting; it was always more likely to hold off on plumping for more quantitative easing until then. However, its far from certain whether the MPC will opt for further asset purchases on 10 May.
Here are a few of the factors that are likely to sway the MPC’s decision on whether it adds its the £325bn-worth of asset purchases. Read more
Spencer Dale, the Bank of England’s chief economist, was at Bloomberg’s London headquarters on Tuesday to deliver a talk that attempted to de-bunk a few myths circulating about quantitative easing.
The highlights of Mr Dale’s speech are covered here by the FT’s economics correspondent Norma Cohen.
However, there was also much that was of interest in the Q&A that followed. Read more
Ben Broadbent, an external member of the Bank of England’s Monetary Policy Committee, talked to the FT’s economics editor Chris Giles in London last week.
Here’s a sneak preview of what the interview, which will appear on FT.com later this evening and in tomorrow’s paper, covered: Read more
The need for a second round of quantitative easing, which now appears likely, highlights the Bank of England’s misplaced faith in the stimulative power of a falling pound.
Ben Broadbent, an external member of the Monetary Policy Committee, this morning blamed the “sclerotic” banking industry for the failure of the pound’s depreciation to deliver the impact Threadneedle Street was hoping for.
If Mr Broadbent is right, then the economy’s woes are more serious than previously thought, which makes the case for further QE all the more compelling. Read more