Who Will Win The Interest Rate Battle? The Hawks Or The Doves?
All eyes are on the release of this month's Bank of England Monetary Policy Committee (MPC) meeting notes which will be available very soon. We are in the middle of an enthralling battle between the Doves and the Hawks to see whether interest rates are reduced, increased or set to remain unchanged. The latest minutes seem to indicate something of a split vote and confusion as to the short term direction of rates.
The more economists you ask in the City the more confusing the situation becomes with many suggesting that inflation should be the prime target and then try to refloat the economy with an alternative camp suggesting that the economy is on its knees and needs a boost via lower interest rates. As the battle between the Hawks and the Doves continues it seems that we may actually see no move in interest rates in the foreseeable future, something which could see the economy come under more pressure in the short term.
It seems that we will either need to see signs of the economy picking up itself or getting much worse before we see any decisive action by the MPC, although by the time they do react it could all be too late.
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