What is the Monetary Policy Committee for?

The Bank of England's Monetary Policy Committee is responsible for setting interest rates, and is required to aim at an inflation target of 2%. I think we can call their recent efforts an utter failure. This makes one wonder: are they actually trying to reach their target? If so, they seem to be extremely poor at it, as per the forecast of 6 months ago where the current 4.5% figure was right on the edge of their forecast outcomes. Unexpectedly!

If they are so poor at their forecasting, they should be replaced by a team who may be better at such forecasts. If they are not good at forecasting, one can only conclude that they simply don't want to target a 2% inflation rate and view their task as something entirely different - say, a staggering transfer of wealth from savers to borrowers which seems to have had the side effect of keeping UK house prices much higher than they would otherwise be. Who knew?

While I wouldn't necessarily agree with Land Value Tax advocates such as Mr. Wadsworth, I must confess that I'm coming around to his observations that monetary policy seems to favour home owners to a considerable degree. Discuss.


  1. The MPC wants to inflate away the debt.
    All the time pretending that they're not and that they really are trying to deal with inflation.

  2. I'm intrigued as to how the MPC thinks that inflating away UK plc debt is within its ambit. Am I missing something obvious? (beyond the standard childs' "I can so I shall")


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