Central banker contradicts Cameron’s monetary policy claims

David Cameron's economic policy today faces a new attack from a respected central banker. Paul Fisher, head of markets at the Bank of England, appears today to contradict remarks made by David Cameron in his leader's speech at Conservative party conference a week ago.

David Cameron’s economic policy today faces a new attack from a respected central banker. Paul Fisher, head of markets at the Bank of England, appears today to contradict remarks made by David Cameron in his leader’s speech at Conservative party conference a week ago.

Speaking about the Bank of England’s policy of quantitative easing, which has injected money into the economy through the purchase of government bonds, the Financial Times report that:

“Mr Fisher argues there is still sufficient spare capacity in the economy to mute inflationary pressures, giving companies little leeway to raise prices and making employees think twice before demanding large pay rises.”

By contrast, Mr Cameron last week said:

“Right now, the Government is simply printing [money]. Sometime soon that will have to stop, because in the end, printing money leads to inflation. Then the Government will have to borrow it.”

Mr Fisher’s remarks are the latest blow to Cameron’s grasp of monetary policy. Last Friday, within hours of making his speech, Cameron was criticised by two former central bank officials:

“David Blanchflower, who left the bank’s Monetary Policy Committee in May, said Cameron’s speech yesterday was ‘bizarre’ and if put into practice may tip the U.K. into a “depression.” Shamik Dhar, a former Bank of England economist, said ‘at best this is wrong and at worst downright dangerous’.”

It remains unclear whether Cameron would over-rule Bank of England staff on the policy if he became Prime Minister.

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6 Responses to “Central banker contradicts Cameron’s monetary policy claims”

  1. Matt London

    You do think in Daily Mail headlines, don’t you?

  2. Silent Hunter

    Sorry?

    This would be one of the “Bankers” who failed to spot the biggest crash in our history happening under his nose?

    Yeah; I can see why you think he has the answer LOL

  3. Mark

    Will, I don’t think you get it. Cameron has said Quantitative Easing (QE) has to stop at some time, something Fisher knows too. Read the FT interview and Chris Giles asks him about when QE will stop.

    QE does cause inflation, that’s the point. It’s a tool to fight deflation, so by definition it’s inflationary.

    I know you want to make mischief but it would help if you didn’t get confused by the subject. I’m happy to explain more, drop me an email or ask aloud on the comments and I’ll try to reply.

  4. Caroline Sick Of The Lies

    All this lot in Labour seem to work in “What MIGHT happen”.

    Look was HAS happened since we have had 12 years of a dithering dishonest buffoon running the finances – and I don’t care what other countries feel about him – they’re not picking up the bill for UK PLC – we are.

    No one in this country will take lessons from any member of this government regarding the finances of this country.

    Surely the left are happy that people agree with them – it’ll make it easier for them to win the election. Why complain if Cameron makes these “mistakes”?

    Give us an election now and we’ll show you how we feel.

  5. Martin

    No doubt Fisher’s concerns spring from his knowledge that the Tories have been totally antipathetic since day one to Labour’s initiatives to address the crisis and had they been in power we probably would have faced econonic meltdown – as has become even more clear since knowledge about events that cricical w/e a year ago has been made public. More worrying for the future is the realizaion from Cameron’s politcally clever conference speech is that the Tories, if they gain power, will cut state spending from day one taking no account of the state of the private sector. They don’t get, and never have, the diffence between private debt and public. Individuals get into trouble with it because they have a fixed income with little prospect of it growing much or at all. Countries on the other hand can go into huge debt because by investing in infrastructure and education etc. etc. the economy will grow enabling the debt to be paid off in the future. This is how Britain’s economy grew to world preemminence in the 19th century and other immergent economies have done since. It’s a looming tragedy for this country that the Toties have been able to use the current mess to revert to type and relish reducing the role of the state. Back to private wealth/ public squalour!

  6. Will Straw

    Mark – this isn’t about causing mischief, it’s about scrutinising the economic illiteracy of Cameron. Of course the BoE can’t carry on buying government bonds forever but the fact that we are doing so at the moment with extremely low inflation outlines how severe the recession could have been without government intervention. Cameron is desperate to show that Government is the problem even when it is actually helping. To that extent, Fisher and Cameron’s positions couldn’t be further apart.

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