Good to hear…

that there are sane people still around. This is an interview with Adam Posen external BoE external MPC member:

The Bank of England‘s leading dove has predicted that inflation will tumble to 1.5% by the middle of next year as George Osborne‘s austerity drive and the underlying weakness of the economy stifle consumer spending.

In an interview with the Guardian, Adam Posen admitted he had sleepless nights over his call for more money to be pumped into the economy and said he would not seek re-election to Threadneedle Street’s monetary policy committee if his view turned out to be wrong.

Posen said: “If I have made the wrong call, not only will I switch my vote, I would not pursue a second term. They should have somebody who gets it right and not me. I am accountable for my performance. I’m holding my nerve because it is the right thing to do.”

Note: See this post on UK inflation

But “insane” people still travel in lofty circles. This is Charles Plosser:

Federal Reserve Bank of Philadelphia President Charles Plosser warned Friday of the risks of keeping monetary policy too easy in the face of an energy price shock.

“What creates inflation is monetary policy at the end of the day,” Plosser said.

Bloomberg News
Philadelphia Fed President Charles Plosser

Citing the jump in energy prices, Plosser said “the reason oil prices worry me is that there will be more pressure to keep monetary policy easier for longer” as some fear these price gains will hold back growth by reducing households’ spending power.

“That response is a response that will in my view” create inflation, and “we need to lean against that,” the policy maker said.

3 thoughts on “Good to hear…

  1. So, now that we have entered Q2, and with 3 months to go, how does Posen’s call look now?
    CPI has fallen as the consensus expected, but it has been stickier than expected falling only to 3.4% vs consensus 3.1% for late Q1 2012.

    JP Morgan expect it to average 3.0% in 2H 2012.

    So what is the dovish interpretation of events?

  2. Pingback: » Just How Accountable Are The Inflation Doves?

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