Wow! 2017 is kicking off with a bang – MPs are doing an inquiry into monetary policy!
Happy New Year indeed!
“A long, hard look at the way the Bank of England has conducted monetary policy since 2008 is long overdue so the announcement by the Treasury select committee that it is launching an inquiry into ultra-low interest rates, quantitative easing and forward guidance is welcome”, writes Larry Elliot in the Guardian on 22nd Dec 2016.
“The theory behind austerity was that monetary stimulus would generate the growth and the tax revenues to enable the government to fix the hole in the public finances. Instead of taking advantage of historically low interest rates to borrow for much-needed public investment, George Osborne relied on the Bank to stimulate growth through private borrowing. The conclusion the select committee should reach is that this unbalanced approach didn’t work last time and it won’t work next time either.”
This inquiry is an opportunity to shine a light on the failings of monetary policy since the financial crash. It has led to worsening inequality, low productivity and is helping create the conditions for another crash.