CITY AND SUBURBAN
No painless cure for our inflationary bug there's a lot of it about
CHRISTOPHER FILDES
The trade union leader was lying on his sickbed when his comrades sent a message to him. They wished him, so they told him, a swift and complete recovery by seven votes to five with three abstentions. This is rather the way the Bank of England's Mon- etary Policy Committee feels about the British economy. In the three-way split between leaving things alone, waiting and seeing, and banging interest rates up right away, the bangers-up were outvoted — but most of the committee's outsiders were more hawkish than the hawks from the Bank itself. No faction will have been impressed to see inflation, this week, hit the Chancellor's target. It was going to do that some time, and may not do it next time, and should be expected to fall short as well as overshooting — and if we mea- sured inflation by the price of goods and services produced and sold in Britain, it would be overshooting by miles. The pound's great run has helped to keep infla- tion down but must be nearing its end. We are still paying ourselves more and more, and monetarists like Charles Goodhart (who is on the committee and voted for banging up) cannot fail to observe that there is far too much money about. The leavers-alone want to think that Britain has somehow cured itself of its inflationary virus, or will do so once it gets a small deflationary jab of Asian flu. The bangers- up will believe it when they see it, and so shall I. We have been asked to believe it too often.
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