All eyes on the Bank’s weather-vane — this one could go to a recount

At last some excitement. The next vote is on Monday, and this one could go to a recount. All eyes will be on the weather-vane in the Bank of England’s Court Room, which shows its directors how the wind is blowing. Next door, in an elegant anteroom, the nine members of the Monetary Policy Committee will have to decide whether interest rates should go up. This week in Washington, the Federal Reserve Board showed the way. Last month in London, the Committee voted 7–2 to wait and see, but the two in the minority were the two Bank directors who by the nature of their work are closest to the markets. Others may have preferred to hold their fire until the election was over — not that so worldly a motive would ever be reflected in the minutes. Since then the wind has been backing and filling. The steam has gone out of the market in houses, but prices are still running 7 per cent above where they were last year. The shops, it is now clear, have had a cold spring, and the great British consumer may be handing over the big spender’s torch to the Great British government. Manufacture is back in decline — but inflation is not. On any measure, including the fancy one wished on the Bank by the Chancellor, it has been gathering speed. The hawks on the Committee will say that its remit is to hold inflation steady, and that rates therefore need to go up. The doves will protest that the economy is not as strong as, for the last few weeks, we have been told. Has it all been a conjuring trick, an election perfectly timed for the top of the cycle? Tricky.

Sorry, wrong number

For a case study of what is going on in the British economy, the Committee might look at Marconi, now going down slowly for the second time.