In a surprise move, the Bank of England today cut the official base rate of interest by 1.5% to 3%, the lowest level in half a century. The move’s been welcomed by Lib Dem shadow chancellor Vince Cable – not surprisingly, as he has consistently called for deep interest rate cuts in the last few weeks. Take, for instance, his appearance at Prime Minister’s Questions, standing in for leader Nick Clegg, on 15th October:
I sense that the Minister [Harriet Harman, Leader of the House] does not realise that there is a very real emergency. Given that there is that very real emergency, why do the Government—and also the Conservatives—insist on this absurd monastic vow of silence that means never even talking about interest rates? There are millions of people out there worrying about their homes and their businesses, and clamouring for a deep cut in interest rates to prevent this recession from turning into a deep slump.
Ms Harman’s response? “I do not really know what the hon. Gentleman is talking about in relation to interest rates.” Quite.
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2 Comments
Er, wasn’t it our party which was so keen on interest rates being a thing politicians shouldn’t get involved in setting? Surely the logical consequence of that line we’ve been so proud of saying was originally our idea is that politicians should observe a vow of silence on it.
I agree with Matthew. A week or so back we were saying that the MPC needed a new mandate. Presumably we now think that the mandate is fine?