Economic Whistleblowers Say: Cut Those Rates!
Heads up! A band of independent cash‑connoisseurs—yes, the folks who keep a close eye on the Bank of England—have throw‑in their hat into the ring and are calling for a smack‑down on the nation’s interest rates.
Why the Big Cut?
Picture this: The Bank’s Monetary Policy Committee (MPC) is debating whether to lower rates next Thursday. Meanwhile, the Shadow Monetary Policy Committee (think of it as the “opinionated watchdog” group) has been warning that the bank’s monetary growth has been slack‑sliding. Their aim? Keep inflation humming within its target—and prevent the economy from going into a full‑blown recession.
Money in Motion
The UK’s “Broad Money” (M4) supply took a nosedive in 2023, which shrank inflation and tightened credit. By September, M4 (sans intermediate financial firms) had slumped more than 4%—a plunge that, due to the typical 18‑month lag, would ripple out most noticeably by March 2025.
What the Shadow Crew Thinks
- “We might have already missed the chance to stop inflation from falling below target; moving forward, monetary growth is still low, but not heroically so,” said several SMPC members.
- “However, if we keep the policy tight too long, we’re jeopardising growth. We need a bold move—cut the Bank Rate by 25 or so.” – a consensus that shouts for decisive action.
- Chief among them is Andrew Lilico, chair of the Shadow MPC and a fellow at the IEA. He’s vehement: “The Bank over‑compensated back in 2021/22 by letting the money grow wildly, and now it’s still too tight. They’re barely touching real indicators like wage inflation, but that’s déjà vu from an era that’s long past.”
Bottom line September style
In plain English: the independent economists think the Bank’s got its fingers too tight on the wheel. If you want an economy that keeps oscillating around the right inflation, cut those rates!
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