Belfast Telegraph

Thursday 3 September 2015

For King and Co, doing nothing is the only option

By David Elliott

Published 05/10/2012

Another month and nothing changes. No, it's not the seemingly never-ending delay by the Treasury in deciding whether we can cut our corporation tax, but the Monetary Policy Committee's decision on interest rates.

Mervyn King and his economic experts have again kept interest rates at a half of 1%.

No shocks there, but there are at least a few raised eyebrows at the MPC's decision not to print more money or to quantitatively ease - to give it its more accurate title.

The fact the bank hasn't gone running for the 'start' button on the printing press could reveal a modicum of confidence within the money men and be a sign that the UK economy is beginning to pick up.

That's taking a very optimistic outlook, but could very well be the case - particularly as the governor said last week there are a few signs of recovery beginning to emerge.

But, without wanting to take the shine off things, there is concern in some quarters that quantitative easing isn't really up to the job.

Even Paul Tucker, a man who only a couple of months ago visited Northern Ireland to get a flavour of our economy, has said that QE might be losing its bite.

He's worried that by opening the printing press again too soon we'll be fuelling inflation and nobody, particularly the bank, wants to push up inflation before we've got the economy ticking over again.

So that leaves Mr King and his cohorts in a difficult position, one where doing nothing is pretty much the only option available.

Inaction is the new action.

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