An interesting piece this weekend on the BBC essentially confirming what we’ve been saying for months now, namely that more money printing courtesy of the BoE is coming, maybe as soon as October (precisely what we said two weeks ago).
From the UK’s very own Krugman-esque Stephanie Flanders:
…we can be pretty confident that another round of emergency cash injections for the economy – quantitative easing – was discussed at the latest meeting of the Bank of England’s policy committee, which concluded today…
…The MPC may go for more QE in November, or even October. But my sense is that they would need more bad news to do it. They would need to be confident that the economy was truly heading downhill, and we were not simply looking at a prolonged period of disappointing growth.
And here we get in the last paragraph what the justification of more money printing in the face of high inflation will look like from the BoE:
There is little sign of that reduced credibility today. And little sign of inflation taking root in the domestic wages. Quite the opposite. But still, most on the MPC still need some convincing that an extra bout of QE is worth doing. If we are unlucky, more bad economic news over the coming weeks may do just that.
There’s that straw-man of ‘wage inflation’. Take a look at the BoE mandate and see if you can find anywhere where it makes specific reference to ‘wage inflation’. That’s right it doesn’t, the BoE’s mandate is to keep CPI inflation at 2% – which it has failed for over two years to do with CPI inflation sitting near 4.5%.
But despite the horrendous miss of their government mandated target for such a long time the BoE looks set for even more inflation courtesy of more quantative easing.
Get ready folks because the ‘bad economic news’ needed in the next month to justify more money printing is coming and the £ in your pocket is about to be devalued yet again. For those that missed just how fast a central bank can steal your purchasing power, you might want to take a look at this.