The Bank of England stands accused of incompetence today following yesterday's publication of minutes from the last Monetary Policy Committee meeting earlier this month.
The Daily Telegraph quotes Tim Congdon, former economic adviser to the Treasury, as stating the fact the majority went against governor Mervyn King in voting for a 0.25% cut to the base rate shows other members have failed to grasp the significance of ongoing inflationary pressures.
"The MPC has done a good job over the years but they cut rates this month simply because the market expected it and the market was wrong to expect it, given what is going on in the economy," Congdon says.
”I do not understand how the MPC has not seen inflation coming. It is not difficult - it was clear to me. They have lots of sources of information and this is just incompetent," he said. If you cared about money then you could not remotely have cut interest rates last time."
The Times says King will now be concerned about how to present the next MPC meeting to the markets in light of the clear divisions between hawks and doves in the committee.
The FT says it now looks far more likely there will be no further rate cuts this year, and that there may even be some increases given the statement in the minutes about members not making any assumptions about the direction of the economy.
The Scotsman quotes another economist suggesting the minutes show the rates decision was “controversial”. It also shows a clear split between the governor and his two deputies and the ‘outsiders’ on the committee, especially former editor of the FT Richard Lambert, who cast the swing vote in favour of the cut. There was also clear water between King and the Bank’s chief economist Charles Bean who sided with the doves.
USERS OF ACCOUNTANT Deloitte & Touche’s services may be rethinking their contracts today following news that the firm faces an unlimited fine or even a total ban from auditing in the UK because of alleged breaches in duty in the Rover MG affair.
The car maker collapsed earlier this year, and now the accounting profession’s regulator the Accountancy Investigation and Discipline Board is to investigate Deloitte’s role. Rover paid the accountant some £7.8m in fees between 2000-2003, documents suggest, writes the Telegraph
The Times adds that this latest investigation follows others in Italy – linked to the collapse of food maker Parmalat – and the US – where the accountant paid $50m to settle a case with the US Securities and Exchange Commission over its involvement with bankrupt cable television company Adelphia, in which Deloitte admitted no wrongdoing.
Deloitte is not alone, however, as the Times points out the AIDB is already investigating PricewaterhouseCoopers over its involvement in failed engineering group Mayflower, Ernst & Young is embroiled in a battle with former client Equitable Life, and KPMG is being sued for £300m over its role in the collapse of Independent Insurance.
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