February 26, 2018

Bank of England barking mad

The BBC reported earlier this month about the results of the Monetary Policy Committee (MPC): The Bank of England has indicated that the pace of interest rate increases could accelerate if the economy remains on its current track. Bank policymakers voted unanimously to keep interest rates on hold at 0.5% at their latest meeting. However, they said rates would need to rise “earlier” and by a “somewhat greater extent” than they thought at their last review in November. Economists think the next rate rise could come as soon as May. The value of the pound jumped by about 1% against both the… Read More


The “Taper Tantrum” revisited

In the recent Booth School of Business conference in New York, a handful of authors, from academia and the markets, conclude: “Our procedure attributes most of the bond market selloff during the 2013 ‘taper tantrum’ to better economic news rather than to changing expectations for the end of balance sheet expansion,” the authors wrote. Independently, David Andolfatto in a blog post reaches a similar conclusion: Consumption growth turned positive in 2013.4, and continued to climb well into 2015. So while the tantrum may have contributed to the spike up in yields, the reason they stayed higher is because of an… Read More