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| jonbwfc wrote: yeah, right. There's a set level of unemployment at which point he's supposed to raise interest rates and when unemployment gets within .1% of that he says 'you know what, we're going to change the criteria'. I believe that's called 'moving the goalposts' and it's not something to be applauded. Why not just say '"I'm not going to raise interest rates because if I do this property bubble we've based the recovery on will burst" and be done with it. | |
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Because managing house prices is a matter for the newly created Financial Policy Committee of the Bank of England with its shiny new macroprudential toolkit.
Interest rates (set by the Monetary Policy Committee) affect business investment and international capital flows among other things. They are not a one-dimensional tool suited to narrow obsessions like yours, they cause money to gush or trickle into an entire economy. The main reason for raising rates when unemployment falls below a given threshold is that it is a signal of inflationary pressure; which, over a time period of a couple of years it would have been. But as that number has been reached with unexpected haste, it is not currently a very reliable indicator of imminent inflationary force.