Mark Carney has said that interest rates will not rise in the UK until unemployment falls from 7.8% now to 7%.
Now there are various ways of interpreting what that means in job terms - and it's not clear if he's using benefit claimants or unemployment data. But generously that means a fall in unemployment of 250,000 people is needed before interest rates rise.
Well of course that's better than nothing. And the way the government is still sacking people the target might a while to achieve. But it's also pretty modest.
That would leave maybe 900,000 young people without work for example.
But it would mean interest rates rising despite that.
Let's not get bowled over as yet that this puts unemployment at the heart of the economy or economic thinking. It doesn't. All this says is that the Bank thinks there's enough slack in the economy to not raise rates until 250,000 people are back at work.
And then it will revert to type and squeeze the economy hard.
That's not enlightened thinking - that's just saying the inflation risk is very low right now - as I suggested this morning.
I am not impressed.
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What do you think the BoE should do?
It’s not the BoE’s job
It is Osborne’s
And he needs to deliver the Green New Deal
I wonder what he means by ‘back at work’. How will that be determined when we already know the unemployment figures are bogus, I wonder, as they already omit people who’ve been sanctioned, for example. Also the hundreds of thousands of people found ‘fit to work’ by the American insurance company inspired WCA have never shown up on JSA. Where have they all gone then? The figures are clearly being fiddled to a huge degree and frankly disappearing a further 250,000 would be a bagatelle for old hand at this Duncan-Smith. It seems to me something nasty is being set up for us and we’re being prepared for it… but what?
You voice my concern
250,000 people refused benefits and registering very marginal self employments – a major source of so called new jobs – is enough to deliver this
And the same goes for all the new “jobs” with zero hours contracts. Very little of the “new jobs” are real jobs it seems to me, more new serfdom.
Apropos of which, I said to a neighbour before the last election that the middle classes were blind to the upward creep, now greatly accelerated, of pauperisation into the middle classes – and so it has proved. When will the electorate wake up?
Osborne is assuming after 2015
The electorate won’t ‘wake up’ Nick – the narcolepsy is deeply ingrained and now there is the intoxicating incense of a housing bubble! people will crawl on their bellies over post industrial waste land to follow the mortgage pied piper. Low interest rates created little investment and money circulation what will high interest rates do except generate more banking scams in the derivatives/ futures market?
Nick, I entirely share your view about the demise of the middle classes. Surely this has already happened to a considerable extent in the US, and as the UK is following the same neoliberal model then it was inevitable that we would follow. It will be some considerable time before the electorate will wake up to this because most people have very little knowledge of the destructive nature of neoliberal economics. The mainstream media, with the exception of the Guardian perhaps, is unlikely to provide the analysis required to really understand what is happening as it is so easily preoccupied with the cult of celebrity (including the Royal family)or demonising the poor and migrants. Unfortunately, we also have a political ‘opposition’ which is not offering an alternative (here again we follow in the footsteps of the US) so the future for the majority looks quite bleak. There is likely to be a temporary feelgood factor generated from the housing market but this is predicated on debt and we all know where that will end. A very gloomy prospect for the future direction of the UK!
Well put, Teresa – if the public wake up to the fact that the mortgage/massive leveraging idol is a false god then change will follow automatically throughout the financial sector. The help to buy scheme is a short term drug that will simply backfire in two years (around the timescale needed!). When will the wake up happen?
“Mark Carney has said that interest rates will not rise in the UK until unemployment falls from 7.8% now to 7%” He surely can’t be serious Richard. It’s unbelievable what our pollies will accept as “full employment” these days. There are no signs of inflation in the U.K. economy, so he surely can’t use a drop in umemployment as justification for a rate hike. The man’s a fool if he hikes rates.
We agree
And 7% is far too high
Anthony, great things are expected of Carney, but I recently read that he has left behind a housing bubble in Canada and of course he has worked for Goldman Sachs so possibly he has a very high opinion of his capabilites. Only time will tell if he is a ‘successful’ BOE governor for the UK.
Teresa, I wish you hadn’t mentioned that he worked at Goldman Sachs. 🙂
I’m always concerned when someone from Sachs receives a high appointment, e.g. Mario Monti in Italy.
Apparently he worked for Goldman Sachs during the firesale of Russian assets!