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By Martin Wolf
Published: January 13 2011 21:59 | Last updated: January 13 2011 21:59
To tighten or not to tighten, that is the question. It is one on which the current UK discussion risks becoming more than a bit hysterical. Yes, inflation is well above target. Yes, the Bank of England failed to forecast this. Yet these facts are neither a necessary nor a sufficient argument for tightening policy.
Famously, monetary policy works with long and variable lags. No sane monetary policy "“ that is, no policy that seeks to avoid the certainty of futile slumps "“ could prevent an overshoot of the target over the next few months or even over the next year. These are just bygones. All anyone can do over bygones is weep.
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