Quick question re: Bank of England

It would *appear* that the answer is Yes, as the following quote appears on the Conservatives website, dated 22nd March:

"The Conservatives are the only political party committed to the long term independence of the Bank of England, Michael Howard has declared."

Bitstring , from the wonderful person Terry said

That depends on the chancellor - he gave the power to the BoE, the next one (or the current one) could easily claim it back.

But is it truly independent anyway? Certainly interest rates can't be changed on a daily basis to suit political whims but it would be naive to suggest there is no influence.

Also, if the BoE was totally independent then logically New Labour couldn't lay claim to 'lowest interest rates in a generation'... blah blah.

"Guess who gets to choose the yard stick they use for measuring inflation? ;) The same person also chooses the target inflation rate and also decides on who to appoint to the MPC for relatively short 2 year terms, very useful if somebody develops into a vexatious realist.

For example if things get difficult then you just stop measuring those pesky things nobody cares about anyway (council tax, mortgage repayments, insurances etc), then replace the 'R' with a 'C' and hey presto inflation would be just

So they aren't idle powers, this could really happen... oh s*it, it already did!

Hrm. "

Whoever comes in I hope the BoE retain their powers, as I think they've done a fantastic job tweaking and tuning the interest rates to suit the environment.

Doesn't that depend what sector of the economy you are in?

If you were in manufacturing, you would have loved lower interest rates.

Perhaps higher interest rates would have slowed growth of property prices to reasonable levels.

I suspect we will have to wait to learn whether they were too high or too low.

cd

Surely they've failed to even meet the target they've been given?

The target is 2% and they've undershot it continously, that's not success, that's a systematic failure surely?

Jim.

"Jim Ley" wrote

The target is actually a *band*, either side of 2%. For how long have they been outside of the *band*?

They've been consistently below the target, okay they were still within the band, but surely the idea of a target is to actually hit it, and continously undershooting suggests something was going seriously wrong. Surely it would be reasonable to expect people targetting a particular value to average that value over a long term, not average considerably below it?

Jim.

In message , Tim writes

"john boyle" wrote

OK, you may be able to say that they try to achieve *close* to a specific "point-rate" ("target"), but it is impossible to actually achieve an *exact* target of 2.0000000000%. Even 1.9999999999% or 2.0000000001% would be "off target"!

So, it is hardly surprising at all that "they've failed to even meet the target they've been given" - as the OP complained.

Bitstring , from the wonderful person Tim said

Actually they were failing pretty horribly to meet their prior RPI target (2.5% - it was up to about 3.5% iirc), so they got a new target and a new way to measure it. Now they're undershooting that one. For a while.

In message , Tim writes

I agree. I am merely pointing out that the target is not 'a band' in the way you describe.

Bitstring , from the wonderful person john boyle said

Ah, but remember the origins of the saying 'close enough for government work'. 8>.

Yes.

Though they only do so in line with the government's stated monetary policy objectives, and those can of course change!

MC

So, it's now 1.9% I believe? Bang on target?

Roland.