This week marks the tenth anniversary of the beginning of extreme monetary policy in the UK. On 5 July 2007 the Bank of England, convinced that inflation was about to take off, raised interest rates to 5.75%. But inflation didn't take off. A financial crisis did.
The next moves in rates were down and down again to 0.5% in 2009 and then, as part of a misjudged Brexit panic, to 0.25% by the end of last year. The last decade has seen the odd vote by a contrarian member of the MPC to raise rates, but no follow-up action. At first glance that seems nuts. After all, as the Financial Times points out, today's data looks rather "more bullish" than that of 2007. Then the unemployment rate was 5.5%, inflation was 2.5% and consumer credit was growing at a mere 4.9%. Today those numbers are 4.6%, 2.9% and 10.3%.
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