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The relentless stream of negative economic news out of the UK has the headline writers dredging up the old specter of stagflation - a "stagnant" economy with rising inflation. While the UK isn't at the point of recession yet, and there is reason to suppose that the headline inflation rate will start to ease come year's end, the outlook is certainly deteriorating. All told, it was no surprise when the Bank of England's (BoE) nine-member Monetary Policy Committee (MPC) left the repo rate unchanged at 5.0% on July 10. However, this morning's release of the minutes of that meeting did contain a bit of a surprise: while seven of the members opted to leave rates on hold and one argued for a cut, the ninth member had argued in favor of a rate hike. Not only was this three-way split unusual (the first in two years), the tone of the... [read full story]
