Bank of England minutes

During the dubious ‘I’m a celebrity’ program – Ant and Dec are great, the rest of them are in supporting roles I – I snatched a few minutes to read through the Bank of England’s Monetry Policy Committee minutes from earlier this month.

Ordinarily they are pretty dull and I barely scan through them – remember we went 3 years when the interest varied 0.25% at 12 month intervals, so this is usually a pretty slow moving read.

The current state of the nation makes the minutes relatively gripping, I guess in the hope of knowledge and insight that is above the level the …I nearly said tabloids, but the broadsheets and broadcast media are all tabloidy these days.

They think the measures to boost liquidity worked – I hope they’re not being optimistic there, the difference between interbank lending rates and the Bank rate is reducing, but slowly and aI guess is you measure ‘worked’ against ‘total seizure’ then it did work, but the liquid is more like ketchup in a  glass bottle than the free flowing money market we are used to.

The trouble here is that there is still potential for another bank or 2 to get into trouble and the other banks don’t want to catch a cold so they are keeping their cash in house.

There is a note that fewer people are buying cars – I hear today that Honda are closing their Swindon plants for February and March – that is bad at face value, but also means that Honda see this slowdown lasting until the middle of next year at least.

They expect house prices to continue falling – and my experience is that surveyors are extremely pessimistic about the true value of properties at the moment.

They comment that inflation is starting to fall – I ahve the benefit of 2 weeks more knowledge than they did when they had their meeting – Inflation did fall last month, quite alot.

Which explains why they dropped interest rates by 1.5%, and they discussed a 2% drop. More importantly, the bit I was interested in – the score of the vote for the drop – it was unanimous. To my mind that means there is scope for more drops – if they were dropping the maximum amount there would have been votes against by the more cautious committee members.

They make projections that show recovery in Q3 & Q4 next year. This shows they have confidence in their actions so far – but I have a little feeling that they would – they act on what they think would be effective and factor that effectiveness into their predictions. I find myself thinking that sounds optimistic – I wonder if they’ll be more pessimistic next month.

I’m looking forward to next months minutes already!