MPC Minutes, September 2012
The September MPC minutes are out. The Guardian saw “raised hopes” of more QE. I thought the minutes are rather hawkish. There are three references to risks that the CPI rate “would fall more slowly than the Committee had previously anticipated”. Maybe the MPC really are trying to get the headline CPI rate down to 2%? Who’d have guessed?
Five mentions of uncertainty. The Funding for Lending scheme is a new source of confusion for our poor MPC members: they are not sure whether people actually want more credit.
24. Turning to inflation, the Committee continued to judge that there was a substantial margin of spare capacity in the economy, particularly in the labour market. This would continue to bear down on domestic inflationary pressures for some time. But oil prices had risen again and continuing tensions in the Middle East meant they could possibly increase further.
Are the MPC concerned primarily with domestic inflationary pressures in the Middle East? I think we should be told. How else do we make sense of that? (Maybe the MPC really are targeting… oh, I give up.)
With the untimely exit of Adam Posen, we can presume that David Miles is the MPC’s remaining “dove”:
For one member, the decision this month was more finely balanced, since it was not clear that the uncertainties about the medium-term outlook would be resolved to any great extent in the coming months and, given the weakness in demand, a good case could be made at this meeting for announcing more asset purchases.
But even Mr Miles is stuck on the fence. So long, Adam, and thanks for all the QE.