No rate cut was needed: U.K. economy was already stimulated by devaluation, end of austerity
by Matthew Lynn
Mark Carney, the governor of the Bank of England, is hardly the most reliable guide to anything.
He warned constantly that interest rates would have to rise soon, but had managed to get through three years in office without changing them even once — until today. He had been through several versions of “forward guidance,” and come up with a range of newfangled ways of managing monetary policy, only to abandon them after a few months. An East German Trabant was more likely to get you to your destination on time.
Even so, when the bank cut interest rates Thursday and launched another round of quantitative easing, it didn’t come as a major shock to the markets.
And yet, that may well come to be viewed a huge mistake.