BOE is a mess, Shouldn’t do more in November – NotAYesManEconomics

BOE’s rate cut and QE2 in August was called a premature move before it happened. The degree of criticism has stepped up further post august given the world did not really come to an end as predicted by scaremongers.

Still, the latest Bloomberg poll shows majority of economists expect BOE to cut rates by another 25 basis points. Is there a need to do more? What is driving markets to speculate about more action in November? Will BOE bend down to market pressure?

Shaun Richards from Not A Yes Man Economics, while addressing these questions, says the BOE is in a mess and should not do more in November... shouldn’t have cut rates in August in the first place. Richards is joined by tip TV’s Zak Mir and Mike Ingram, Strategist at BGC Partners.

Key points

Monetary policy tools like interest rate cut work with a lag...so BOE should have waited before making a move in August. Its in a mess also because they committed to do more by year end

Central banks these days suffer from ‘Do something philosophy’

We are likely to have a period of high inflation