Clarke wins first skirmish but not the war

Article Abstract:

Chancellor Kenneth Clarke is still in conflict with Eddie George, governor of the Bank of England, about whether base rates should be increased or not. The Bank of England is advising that base rates should rise, but clearly does not wish to maintain this position if economic indicators show that it should be abandoned. However, to back down would damage the Bank's credibility and give more strength to the chancellor's views. It is particularly important to show financial markets that base rate decisions are not influenced by political considerations.

Planning

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Governor leads Chancellor by two goals to one

Article Abstract:

Eddie George, governor of the Bank of England, is still putting considerable pressure on chancellor Kenneth Clarke to raise interest rates, despite the recent small increase. However, observers generally believe that Clarke has generally been correct to stand up to George. The new monetary mechanism being operated by the Bank of England has, nevertheless, performed well so far. Monetary conditions are now tight, and this may mean that it will not be necessary to raise base rates again before the next general election.

Analysis, Economic policy, Clarke, Kenneth (American writer)

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Critics of Bank independence miss the point

Article Abstract:

The decision to give the Bank of England operational control over interest rates has not been warmly welcomed by everybody. Those who have been critical of the decision fail to recognize that the problems which arose as a result of UK entry into the ERM in 1989 will not apply to the new monetary mechanism which is planned by Chancellor Gordon Brown. Interest rates will be set solely on UK economic criteria, and the Bank of England will still be subject to political guidance on matters such as the inflation target.

Management, Bank of England, Central banks

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