MPC - No Change

So the MPC voted for no change last week. This is hardly surprising given that Mark Carney had only been in post for a week or so. However, I have to say I was a little bit surprised at the strength of the statement about long term interest rate propspects. To be as explicit as the statement was risks a future conjunction of egg and face, although in this case I don't think that's too likely. I guess one underlying reason for the statement might be an attempt to drive a little volatility out of markets. We shall see.

No change to QE seems to me to be a good decision but some of the noise from commentators is a little concerning. Take KPMG, for instance. This is clearly suggesting that a future increase in QE is firmly on the cards. Don't we already have enough stimulus in the economy? (Although some of it is mad - such as the moves to prop up house prices - come on guys, let the market find it's own level). And there are some bonkers ways to creating stealth QE already up and running. Interest paid on gilts owned by the Bank as part of QE is now being handed back to Treasury. Isn't that just a tad circular? This is boosting money supply at just a time when it would appear, at least in the cases of households and private firms (excluding the financial sector, of course), that it's pretty good anyway.

As an ordinary Joe I'd like to see us moving to a position where interest rates are no longer at rock bottom, where it pays to save, where bond and gilt yields actually reflect inflation and expected growth, and where central authorities have managed to butt out of interventionist policies.

There is still a lot of pain to be borne, but isn't time we really took the medicine? Cheap money is propping up zombie firms and households. It's time they were purged from the system.