"Good days, bad days"

In Article 6 in the book I set out the role of the Bank of England's Monetary Policy Committee (MPC). We saw that the key activity of the MPC is to set the level of the Repo Rate (see page 31, key terms) which is consistent with the government's 2% target for consumer price inflation. For most of 2008 the MPC has been primarily concerned about the fears of rising inflation. Only one member, David Blanchflower, has been a consistent supporter of lower interest rates. That all changed when the credit crunch started to bite hard in October. The Bank of England cut rates from 5% to 4.5% in an emergency move co-ordinated with other central banks. And today they have moved much further. They have lowered the Repo Rate by 150 basis points to just 3%. This is the first move of more than 50 basis points since it became independent in 1997. This move shows that the members of the MPC are all now focusing on trying to halt the sharp economic slowdown. For now Mr Blanchflower has eleven more allies all agreed that rising inflation is yesterday's problem. As he looks back to his period of long isolation he might conclude that we get some "good days and some bad days". By the way that is not a bad name for a song. Sadly I fear that the Kaiser Chiefs got there first!