Lunchtime Must-Read: Graeme Wearden: Bank of England Split 7-2 Over Interest Rates

Graeme Wearden: Bank of England split 7-2 over interest rates: “The Institute of Directors, which represents Britain’s bosses…

…is delighted to see two hawks emerge at the Bank of England. The IoD suggested that the seven MPC members who voted for no-change are wrong to focus their attention on weak wage growth (!), and should crack on with raising rates–ideally before Christmas…. The British Chambers of Commerce believes the UK economy isn’t strong enough to support higher interest rates…. Professor Danny Blanchflower, a former (dovish) member of the MPC, reckons the two hawks have blundered…. Jonathan Pryor, head of FX dealing at Investec Corporate and Institutional Treasury, says the 7-2 split is a surprise, given how dovish the Bank’s Inflation Report was last week: ‘This vote is likely to leave UK businesses scratching their heads about the direction of sterling and the best way to guard against potential volatility over the coming weeks and months.’

This is astonishing to me–both the two MPC members who see inflation and bond market vigilantes on the horizon when I see none, and a group whose members are short the future debt factor and long the future capacity utilization factor calling for policies that raise the cost of taking on their debt and lower the sales that their corporations will make. Doesn’t anybody know, not how to play this game, but what this game is? Either on the macroeconomic-forecasting or on the political-economy interest-group side