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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: gregor_us who wrote (50)	2/16/2004 11:16:47 AM
From: mishedlo	Respond to of 116555

Jonathan Loynes, Chief UK Economist, Capital Economics, London SW1W 9TR LETTERS TO THE EDITOR: Further rate rises hard to justify if economy fails to meet Bank's optimistic expectations By Jonathan Loynes search.ft.com Sir, The picture of the economy presented by the Bank of England's monetary policy committee in its February inflation report on Wednesday was an extremely optimistic one … I have no doubt that the committee would prefer to raise interest rates further in order to deflate the housing bubble before it gets too big. ... But if the economy fails to live up to its very optimistic expectations and inflation stays low, it will have difficulty justifying further rate increases in terms of the general inflation outlook. At that point, if it still wants to put the brakes on the housing market before boom turns to bust, it might have to admit more openly to targeting asset (house) prices, with all the risks to the transparency of policy that would entail. Jonathan Loynes, Chief UK Economist, Capital Economics, London SW1W 9TR