Belfast Telegraph

Friday 29 August 2014

'Golden Boots' Mark Carney hits the target and he didn't even take aim

David Elliott, Business Editor
David Elliott, Business Editor

Magic Carney is definitely proving to have the golden touch.

Mark had barely warmed the seat of the governor's desk in his Threadneedle Street office before he was coming up with novel ways to keep control of the economy such as focusing on unemployment a little more and inflation a little less.

It's perhaps ironic that the one Bank governor who hasn't been obsessed with inflation has ended up hitting the bullseye with the annual rate of price increases with 2% figure reported for December.

That will come as a relief for him but more importantly for us, lumbered as we are with hefty price rises and paltry pay rises.

That very situation is the reason most of us have been taking a virtual pay cut over the last few years, a situation clear to see in the recent retail figures.

Because we've less disposable income at the end of the month we've been spending less and retailers have suffered.

Hopefully, the ease in inflation, a more buoyant outlook for the economy and, as importantly, the jobs market will help reverse this tricky situation and we'll be able to buy that big flat screen television we've been hankering after.

But as with all things in economics, a situation of equilibrium is difficult to achieve.

If we do start to see the economy improve and we do have more money to spend then that will help drive up prices and in turn the inflation rate.

That will in turn pressure Golden Boots Carney to increase interest rates quicker than he would have liked which will dampen our spending ardour.

And so the cycle of economic action and reaction continues, one that is sure to keep the governor busy.

Sure what else has he to do?

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