Economics Weekly by Lloyds TSB

The UK monetary policy debate is particularly interesting at present. We expect the vote from the recent October MPC meeting to have been a three-way split, with Andrew Sentance and Adam Posen (and perhaps one or two others) FOMC minutes to whet markets’ appetite for further QE in the US…

The UK monetary policy debate is particularly interesting at present. We expect the vote from the recent October MPC meeting to have been a three-way split, with Andrew Sentance and Adam Posen (and perhaps one or two others) taking opposing sides in the debate, with the remainder of the MPC still in ‘wait-and-see’ mode. Over the past few days, data may have nudged this latter ‘camp’ towards further asset purchases. In terms of key numbers before next month’s MPC meeting, we look for September CPI to show a modest easing in all three main price gauges – although with CPI expected to fall to 3.0% from 3.1%, it remains some way off the government’s target. In the labour market, we look for the ILO unemployment rate to hold at 7.8%, but will also watch closely the more timely claimant count measure. If our own Consumer Barometer survey is correct, claimant count could begin to rise in coming months as companies, faced with weak final demand, re-start job cuts.

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