Bank of England and interest rates: always crashing in the same car

It is now clear that interest rates won't rise for some time, perhaps two years, but the Bank's mixed messages dent its credibility

The Bank of England goes to considerable lengths to explain its thinking. Once a quarter, it publishes an inflation report (pdf) running to almost 50 pages and the minutes of the latest meeting of the Bank's monetary policy committee. When inflation is more than one percentage point away from the target, as it is now, it also releases an exchange of letters between the Bank's governor, Mark Carney, and the chancellor, George Osborne.

It is not really necessary to wade through all the analysis, though, because the late, great David Bowie summed things up in six words: always crashing in the same car. Wages and growth forecasts have been cut. Once again, the MPC has pushed back its estimate of when inflation will hit the 2% target. Carney is readying himself to send more missives to Osborne throughout the course of the year. Threadneedle Street thinks that the next move in interest rates will be up, but it is not 100% sure. The Bank's sole hawk, Ian McCafferty, has given up the fight for the time being.

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