{"id":2690,"date":"2008-11-19T11:43:15","date_gmt":"2008-11-19T11:43:15","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2690"},"modified":"2025-03-27T15:48:45","modified_gmt":"2025-03-27T15:48:45","slug":"mpc-unlikely-to-cut-more-than-50bp-in-december","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2690","title":{"rendered":"MPC unlikely to cut more than 50bp in December"},"content":{"rendered":"<p>Economic models are prone to break down under extreme conditions. My MPC-ometer did not forecast the 150 bp Bank rate cut in November but it did indicate a larger reduction, of 75-100 bp, than expected by most economists &#8211; see <a href=\"http:\/\/www.moneymovesmarkets.com\/journal\/2008\/10\/24\/poor-gdp-number-shortens-odds-of-full-point-uk-rate-cut.html\">here<\/a>.<\/p>\n<p>The December forecast will depend importantly on consumer and business survey results released around the end of the month. However, based on current information, the model suggests a cut of no more than 50 bp. A significant minority of economists expects a larger move, according to a Reuters poll conducted last week.<\/p>\n<p>One property of the model is that the data hurdle for policy easing becomes higher as the absolute level of rates falls. Other factors holding it back from predicting a larger move are the recent further slump in the exchange rate and the MPC&rsquo;s tendency to concentrate action in <em>Inflation Report<\/em> months.<\/p>\n<p>Minutes of the November meeting released today indicate the MPC believes a further cut of more than 50 bp is warranted by the <em>Inflation Report<\/em> projections. However, these projections are subject to revision to take account of the fall in sterling (currently 6% below the level assumed in the <em>Report<\/em>) and fiscal loosening to be announced in the <em>Pre-Budget Report<\/em>. In addition, some MPC members argued that staggering a further reduction could help to support confidence as the economy weakens.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Economic models are prone to break down under extreme conditions. My MPC-ometer did not forecast the 150 bp Bank rate cut in November but it did indicate a larger reduction, of 75-100 bp, than expected by most economists &#8211; see here. The December forecast will depend importantly on consumer and business survey results released around [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2690","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2690","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2690"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2690\/revisions"}],"predecessor-version":[{"id":4999,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2690\/revisions\/4999"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2690"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2690"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2690"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}