The bank’s judgement today was more about output than inflation. There was no public recognition that the UK’s inflation rate has been high compared to most other countries over the last year, and no convincing explanation of why another £50 billion of quantitative easing was thought necessary or how it might work.
The Governor rightly stressed the bad fiscal position and the need to take corrective action. The government will dooubtless ignore this good advice. In the meantime, the pound after its recent rally against the dollar has fallen back a bit. There is no sign of deflation at the petrol pumps.
The latest unemployment figures bring home the evidence that our economy has become uncompetitive and is suffering badly from the boom/bust policies that have been followed since 2003.