The Bank of England should raise borrowing costs to 5.25% at its meeting this week, says one of its leading former policy-makers, The Telegraph reports..
Willem Buiter, a founding member of the Monetary Policy Committee and a professor at the London School of Economics, said the Bank needed to raise the cost of borrowing in order to keep inflation under control - despite the pain higher rates would inflict on the economy.
Prof Buiter says: "The Bank hopes that, with the economy slowing down quite sharply, further rate increases will not be necessary to get inflation back on target over a two-year horizon. I am not so sure.”
A CONFRONTATION IS building up between Mervyn King, the Governor of the Bank of England, and the Treasury over the choice of a new deputy for Mr King, according to The Times.
The Governor is believed to be pressing hard for Charles Bean, the Bank's chief economist, to take over from Rachel Lomax, who steps down as one of two Deputy Governors on June 30.
However, Mr King's strong preference for Professor Bean as the Bank's next Deputy Governor in charge of monetary policy is running into strong Treasury resistance in a stand-off that threatens to inflame an already tense relationship.
THE TREASURY IS delaying proposed changes to the taxation of foreign profits after an outcry from British multinationals, The Times has learnt.
Officials say that legislation may now not be enacted before 2010, the year by which Gordon Brown must call a general election.
The delay comes after decisions by several companies, including United Business Media and Shire, to move their tax domicile offshore. Many others, including GlaxoSmithKline and WPP, have also threatened to move to more tax-friendly countries.IFAonline
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