Finally the Bank of England have woken up and reduced interest rates by 0.25%.

Maybe we can now have turkey for christmas.

However I do feel that the interest rate cut is more political than monetary policy.

Trumpo sees the recent move as the first admission that the current system of assessing ineterest rate movement is questionable. Whilst inflation may be still rising it’s been fueled by rising prices in fuel, food etc. Now these arent luxury goods they’re must-haves. Inflation will be even higher if oil and food prices go higher, and in-turn rates would have to drop even more.

Trumpo is now of the opinion that the current model that the monetary policy commitee operate within i.e. inflation can be curbed by rising interest rates, is doomed.

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