When to cut, not if

摘要

Since cutting the base rate to 5% in April the Bank of England has kept it on hold. At times an increase has seemed likely in order to restrain rising inflation expectations. That is no longer the case. A rate cut is coming: the only question is when.rnThe central bank responded on September 17th to this week's extraordinary developments-which included the forced merger of Britain's biggest mortgage lender, hbos (see page 88)-by extending until the end of January 2009 the period in which banks can swap illiquid mortgage-backed securities on their books at the end of last year for Treasury bills. Only a few days earlier Mervyn King, the governor of the Bank of England, had told mps that access to the "special liquidity scheme" would cease as scheduled on October 21st.rnBut even before this unexpected move the central bank's monetary-policy committee (MPC) had shifted its stance on therndirection of interest rates, as minutes of its meeting early this month, published on September 17th, made clear. In both July and August, the nine-strong committee had voted three ways. A majority of seven wanted to keep rates on hold, but Tim Bes-ley backed a rise to 5.25% whereas David Blanchflower supported a cut to 4.75%. In September, however, Mr Besley dropped his call for a rate increase and Mr Blanch-flower, a consistent dove, argued for a half-point rather than a quarter-point fall.