Raising interest rates is a big mistake. This will have to be reversed | David Blanchflower
UK interest rates have risen from 0.5% to 0.75% because the monetary policy committee (MPC) believes the labour market is at full employment and wage growth is set to explode. Pull the other one, it's got bells on. I don't buy it.
The pound initially rose on the news and then fell back by more than a cent against the US dollar in a sign that the markets didn't like what they heard and didn't believe the MPC's claims either. The Institute of Directors came out against the increase, as have many economists who see no basis for a rise that lowers spending power. This in the same week when the Bank of Japan said it would loosen monetary policy further. Along with the European central bank it has negative rates and is still operating quantitative easing programmes.
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