http://www.economist.com/news/leaders/21571138-how-bank-englands-new-governor-and-chancellor-should-stimulate-british
The British monetary policy is aiming to raise nominal GDP rate upto 10%.It is slowly achieving its goal pretty well.However, it should seriously consider whether it will help them in the long run or not.The rise in nominal GDP growth rate could have the opportunity cost of high inflation and eventual depriciation of the sterling.
The British monetary policy is aiming to raise nominal GDP rate upto 10%.It is slowly achieving its goal pretty well.However, it should seriously consider whether it will help them in the long run or not.The rise in nominal GDP growth rate could have the opportunity cost of high inflation and eventual depriciation of the sterling.
I feel like this is a risky move. Inflation might occur as you have said. And investment would decrease. But again it's always about making compromises, so we'll see how this is going to turn out.
ReplyDeleteThe Bank of England has attempted to use quantitive easing to resolve the issues but how useful is this tool? It all depends on the banking and financial sector’s willingness to lend. On the other hand, if the problem is a general expectation of low growth acting as a limitation of investment expenditure by firms, and there is also a level of uncertainty about income and employment constraining expenditure by households. As a consequence, credit markets, which are fairly liquid, and cashed-up banks alone will not necessarily do much to help.
ReplyDelete