In his speech, Dave sets out his views on how the UK economy has developed over the past twelve months. He comments on the disinflationary process through 2024, which has seen inflation return close to the 2% target, and whether these trends will be sustained into the future. Read his speech in full here: https://b-o-e.uk/4fvulRA
We know from the Office for National Statistics as of yesterday that CPIH (the Consumer Prices Index including owner occupiers' housing costs) rose by 3.2% in the 12 months to October 2024, that October's budget deficit was ￡12.7 billion, and that the government had to borrow ￡17.4 billion. That is a lot of fixed-interest securities needing to be taken up, alongside which Rt Hon Rachel Reeves' 'borrowing-for-investment' is aimed at crowding-in fixed interest debt to the same projects, which will compete for money against the government's gilts and press interest rates higher. Dave Ramsden at the Bank of England will have had advance warning of all of that, and yet he delivers a speech about interest rates falling. There have been ongoing doubts about whether the Bank of England is in touch with reality and here we have another answer.
Tax hikes hitting aggregate demand, commercial loan rates for SME's over 10%, youth unemployment having nearly doubled to 13.5% in less than a year and growth at 0%. Not sure I'd lead with a smiley face in that context. Bank need to cut (normalise) rates to 2.5% until growth returns which in medium term will support the currency and keep inflation at target.
Great speech, thanks for coming up to Leeds University Business School
A zero contribution to human knowledge. Interest rates are rising, of their own accord, thanks to mismanagement by The Labour Party Bank of England HM Treasury and to market doubts as to whether those involved - like this one - have any grip on what is happening in the real world, as opposed to in the spreadsheets and reports they send around to one another. And now inflation has gone up as well, requiring Bank of England to reverse its ill-considered Bank Rate cuts rather than talking about repeating them.