Prospects for monetary policy: learning the lessons from 2011 - speech by Spencer Dale

In a speech given at the London headquarters of Bloomberg, Spencer Dale – Bank of England Chief Economist and member of the Monetary Policy Committee (MPC) – asks what lessons monetary policymakers can draw from developments over the past year, addresses some concerns and criticisms often levelled at Quantitative Easing, and looks ahead to challenges for 2012.
Published on 13 December 2011

Spencer Dale argues that, contrary to a common perception, the support to growth over the past year provided by the lower level of sterling has not disappointed. Net trade has responded broadly in line with previous large exchange rate movements. Instead spending by companies has been surprisingly weak and, more importantly, household consumption fell sharply. He contends that “the surprising weakness in consumption stemmed largely from the sharp pickup in inflation over the past year, driven by increases in VAT, energy prices...and other import prices.” Therefore, not all of our disappointing growth performance over the past year can be laid at the door of the Euro crisis: other factors have been important.

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