Bank of England warned against false hope
A number of analysts have stepped forward to suggest that the Bank of England MPC should refrain from over exuberance in the light of more upbeat statements and reports on the UK economy. The committee is due to meet this month and while it appears as though they will rubberstamp an easing of the aggressive "jumpstart" policy seen over the last few months there is no doubt that we are not yet out of the woods.
Many experts believe we have seen the appearance of an economic recovery before the reality kicks in which can and has on a number of occasions been very dangerous. If the authorities were to take their eye off the ball and sit back and hope that the economy has turned the corner they could well be disappointed and left with egg on their face if further financial issues arise in the US, Europe or the UK. As we highlighted in an earlier post, the Latvian economy is on the verge of collapse and could instigate a chain reaction effect throughout Europe.
We also have a number of issues in the US market, with a suspicion that politicians are talking up the economy without real follow through. If this is the case, and investors are left disappointed then we could see a reduction in consumer and investor confidence which could push us back to square one.
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