EDITOR'S LETTERMerryn Somerset Webb
Carney’s blind bet
Not many people grasp just how bad the UK’s recession has been. It hasn’t felt quite as bad as it should, thanks to the ultra-low interest rates that have kept the wolves from many doors, and a bout of inflation that temporarily disguised falling real wages.
But it is worth remembering that the Great Depression ran for 42 months, while we have been mired in our own misery for 60 months.
The good news, as we said a few months ago, is that when you have a very nasty economic slump, you tend to get a fabulous rebound.
When Bank of England governor Mark Carney introduced the idea of ‘forward guidance’ back in August, he said he would start looking at raising interest rates when unemployment hit 7%, which he expected to happen in 2016.
We weren’t convinced: we said we expected unemployment to fall and hence rates to rise rather faster than the Bank did.
So far that’s been a good call…
• Read the full editor’s letter here: Carney’s blind bet