For what it's worth (not much) I am not optimistic for the UK economy over the next couple of years, and maybe you are right that now is the time to lower rates in order to lower the cost of living and doing business.

Given that the MPC was 8-1 decided in favour of keeping the rates unchanged I wanted to understand the other side of the argument. I know they are not infallible, and I know you are certainly not a lone voice in calling for rates to be cut.

I will believe inflation is gone, and the "system" back on an even keel when people are once again advertising houses for reasonable sums. We should keep a watch on the price of basic homes, and when these are within the reach of someone on a normal wage at a 3.5 times multiplier, then I'll conclude we are OK again.

I apologise for assuming a motive in your article that was not there.

Kindest regards.

Reply: Thanks. I think house prices will fall considerably over this winter, though maybe not back to 3.5 times earnings. Banks will continue to look at net income divided by interest payments.

It also depends what you tax! A short term hike timed with lower interest rates may work. You have to deal with the here and now, not what we would like to do! If quangos were to be cut etc, I have no doubt that a six month review would be instigated first. The economy needs rapid action not vacilation!

The reality here is taxpayers are holding it all up otherwsie it would be BUST. The USA has all but in name nationalized its financial sector and so have we.

It cannot operate without help from the state and no amount of shaking it will revive it…..It's DEAD.

Go back to what it was before finance was deregulated.
Salaries have to come back to earth, massive bonuses and the trading of imaginary financial products must be stopped, shorts must be banned and good old financial prudence must be returned to the system to allow lending to be made available from balance sheets not the taxpayers.

Also, I think noone's noticing another couple of realities.

a ) It matters not what the Bank of England do with interest rates because a cut would not be delivered by banks as they need to restore profits.

b ) Noone wants to borrow money, the media are telling people banks won't lend, but the fact is noone is applying. Hence a drop of 50% or more in mortgage applications.

Why are they not borrowing ?

1 – People can't afford a mortgage
2 – There's too much regulation in the mortgage market
3 – People are jittery about employment
4 – The banks have no money and are averse to take risk

We need a new government, we need a new monetary system, we need to tax those who do not pay tax, tax some people less who shouldn't be paying as much, kick out quango's and take a slicer to public spending plans and to a few odd areas where Labour is basically giving money away, pull out of the Mass Trick Treaty, revalue the pound and kick start our manufacturing industries again without all the Euro nonsense wrapping the UK up in knots.

That will then be a real "Free Market Economy" not a false one bound by red tape and lack of good old prudent financial management.

What’s disappointing is that in your article there is no analysis of the other side of the argument.

We see in the news today (admittedly well after your article was written and published) that the MPC were 8-1 agreed to keep rates on hold.

If reducing rates is so obviously the right thing to do, why did these learned and responsible people not do so? This is not just a rhetorical question. Since you firmly believe they were mistaken, I would value reading your reasons for having that belief.

Myself, I (going by instinct and personal observation only) still think high expectations of house price inflation are still too high. If I look at house price expectations in my area (in the South of England) – measured by the amount people are advertising their houses for – then people still have an expectation of high returns on their property investments. There have been some drops in prices advertised, but nowhere near the amount required to make them affordable again.

So in my humble opinion, as long as expectations stay high we have, if interest rates were lowered now, the potential for inflation restarting its ugly effects on our economy.

Kindest regards

Reply: There was no politics in asking for a rate cut, and certainly no politics in saying public spending has to be brought under control. It is my view of what is needed. The MPC members are looking backwards, not forwards, and worrying about the current inflation (which is too high) and not understanding that it will come down quickly next year. The Bank and its friends have been wrong much of the time during my lifetime, hence the endless sterling crises, public borrowing crises, erratic inflation figures and periodic bank collapses. Probably their worst period was 2004-6, when they allowed very loose money, when most people queued up to praise them because interest rates were so low and credit was so plentiful. I have been a long term critic of Brown’s reforms and of this MPC’s boom and bust approach to monetary management. What possible evidence is there that inflation will be higher next year, when you look at commodities, shop prices,unemployment, wages and asset values?

One thing to remember is interest rates have been historically low. Lower then they should have been in fact, due to the fiddling of the CPI figure. Real inflation in the real world for real things real people buy with real (or borrowed) money has been higher, for longer, than the measure of inflation adopted by Gordon Brown. Yet it is CPI that dictates interest rates.*

Had RPI or RPI-X been used as the target for interest rates we would not be in the over indebted position we find ourselves in as interest rates would not have been artificially low. Also, had the Bank of England's remit not been so narrow we would not be in such a perilous position.

The economy has been sacrificed so the hand of history could be on Brown's shoulder for appearing to manage a decade of apparently good times.

* Is there method in Brown's madness? Keep interest rates low and the Government can borrow willy and indeed nilly to pay for obscene spending splurges, rather than shove up taxation by a huge amount.

Economic growth can be wiped out by the effects of inflation, and controlling inflation has to be paramount. If you put interest rates down, you'll create a false growth, and then have to deal with the consequences of rising inflation. Despite a near economic recession our inflation rate is currently well above the Government's targets, and frankly, it's not clear that the Bank of England have any confidence in where the inflation rate is going.

Now that the Conservative party has returned to Majorite values in large areas of policy making, I am hopeful that Cameron will stand just as firm.

Credit must be due to John Major though, his pressure on Thatcher to join the ERM, and his inspired economic policy and delivery of economic success arguably make him Britain's most competent administrator of the economy.

Inflationary pressures are all around, whether it be food prices or indeed oil prices bouncing back up again as they are not predictable. Inflation can still creep up on an economy, even when it is in, or near, recession.

Now is not the time to reduce interest rates. It's a crude instrument anyway as previous Prime Ministers have discovered. Fiscal policy is an alternative should the Government feel the need to intervene in the market. But Conservatives in my view should put low inflation foremost in their thoughts.

Reply: Inflation went up in the late 1980s because we shadowed the DM, the preparation to enter the ERM. It was a disastrous policy which led to the downfall of Major's government.

Indeed only one Prime Minister has ever really understood the requirement for low inflation to build a successful long-term economic recovery with sustained growth. That Prime Minister delivered low inflation, and was light years ahead of his Cabinet colleagues, indeed, including Mr Redwood judging by his above willingness to let inflation creep back. That Prime Minister was of course John Major, who left a golden economic legacy.

Reply: Of course controlling inflation is crucial. John Major's ERM policy first put inflation up, then after we came out of the ERM he controlled it. Where exactly do you think next year's inflation is coming from? Can't you see the downward moves in commodity prices and the intense competition emerging on the High Street?

Brown-Darling do not understand either economics or financial markets. The inflation imported from gas/food prices is unavoidable. Essential items.

It doesn't take an economics for dummies student to twig that in current deflationary environment cutting interest rates will not cause inflation. We are spending our money on food and fuel to stay alive and get to work.

Idiots.