Yesterday the Governor of the Bank of England thought better of the much touted idea that he would cut interest rates by a further 0.25%.
I am glad he made this decision. I had argued here before the event that another cut at these tiny levels could undermine the value of sterling further without doing much positive.
We have got used to Mr Carney’s chronic inability to forecast anything accurately including his own conduct.We had three separate pieces of guidance from him heralding increases in rates, only for him to change his mind and ignore his own triggers for raising them. This time he changed his mind on cutting them.
It looks as if Mr Carney decided better of it thanks to the removal of Mr Osborne from office. The appointment of a new Chancellor less wedded to Project fear and less associated with the absurd gloomy forecast of the pre referendum Treasury may have persuaded him to be more cautious.
The UK economy has just received a monetary stimulus from the devaluation and loosening. It would be an odd time to add to that stimulus by further unusual monetary relaxation.
I am expecting the property market to improve after the strange attempted shake out from open ended commercial property funds. I also expect consumer spending to pick up after a summer and weather induced lull. I see no need for panic measures.
The new Chancellor seems to have dumped the world”austerity” and seems to want to promote prosperity. That is exactly the right approach. Meanwhile share and bond markets continue to prosper. Let’s go for Prosperity, not austerity. Let’s get our contributions back form the EU quickly and spend them on things we want.