Home > Economics, Monetary Policy > Nominally in Denial

Nominally in Denial

Bank of England Inflation Report, November 2006:

Actual and expected changes in Bank Rate affect the level of nominal demand in the economy.

Bank of England Inflation Report, August 2007:

Monetary policy affects inflation via its influence on nominal demand.

Bank of England Inflation Report, August 2008:

Monetary policy affects inflation via its influence on nominal demand.

Bank of England Inflation Report, February 2009, about to hit the zero bound:

The MPC’s ability to influence the value of nominal spending and inflation in the economy, and hence achieve the inflation target, ultimately derives from the fact that the Bank of England is the sole supplier of sterling central bank money: banknotes and reserves held by the banking system at the Bank.

Regardless of how monetary policy is implemented, the objective for policy remains the inflation target. That means that, whatever the uncertainties about the strength of the transmission mechanism, the private sector should be assured that the MPC will take the steps necessary to bring inflation back to target.  If the MPC were to adopt unconventional measures in the future, that commitment would be a crucial element in ensuring the efficacy of policy, helping (as now) to anchor inflation expectations and boost nominal spending.

Bank of England Inflation Report, August 2009:

In the United Kingdom, nominal GDP fell by 3% in Q1, the sharpest decline since the quarterly series began in 1955 (Chart 2.1).  It was absolutely nothing to do with us, though.  Nope.  Not our problem, mate.  Blame the bankers.

Bank of England Inflation Report, May 2011:

But the evolution of nominal spending over the remainder of 2011 is uncertain. The path of nominal spending since mid-2009 may provide a positive signal about households’ and businesses’ willingness to spend.  In that case, steady nominal spending growth could continue.  We don’t really know what will happen, to be honest.  Economics is a complete mystery to us.  La la la la.  Nice weather, though.

Bank of England Inflation Report, February 2012:

Four-quarter nominal spending growth has fallen back somewhat since the latter part of 2010 (Chart 2.1).  I didn’t do it.  The dog ate my homework.  Look!  There’s a Eurozone crisis!  Here, look at some pretty fan charts.

Minor embellishments my own.

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Categories: Economics, Monetary Policy
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