{"id":128,"date":"2010-11-26T18:43:08","date_gmt":"2010-11-26T18:43:08","guid":{"rendered":"http:\/\/www.faultorfeature.com\/?p=128"},"modified":"2010-11-26T18:43:08","modified_gmt":"2010-11-26T18:43:08","slug":"why-monetary-policy-committee-is-unlikely-to-cut-interest-rates-when-consumer-spending-is-increasing","status":"publish","type":"post","link":"https:\/\/www.faultorfeature.com\/?p=128","title":{"rendered":"Why Monetary Policy Committee is unlikely to cut interest rates when consumer spending is increasing?"},"content":{"rendered":"

Question by i am confused o_O<\/i>: Why Monetary Policy Committee is unlikely to cut interest rates when consumer spending is increasing?<\/strong><\/p>\n

British retail sales jumped by 6.3 per cent in September as consumers, concerned by the product recall from Mattel, bought toys and games while taking advantage of heavy discounting on the high street.
\nThe rise in revenues, signalling the largest increase in three years, surpassed analysts\u2019 expectations of 5.6 per cent growth in sales compared to September last year.
\nTotal sales volume between August and September rose by 0.6 per cent, confounding forecasts that retail revenue would decline. Analysts believe that today\u2019s figures make it unlikely the Bank of England\u2019s Monetary Policy Committee will cut interest rates this year.
\nHoward Archer, chief UK and European economist at Global Insight said: \u201cEvidence that consumer spending currently remains robust well may well deter the Bank of England from trimming interest rates as early as November.\u201d <\/p>\n

The Office for National Statistics reported that sales of toys and games had been particularly strong, which Investec attributed to the \u201cno toys for Christmas scare” last month associated with Mattel\u2019s toy recall.
\nThe American toy maker recalled more than 21 million of its Chinese-made products, including Barbie dolls and toy cars, on concerns that they were either coated with lead paint or contained small magnets that could be detached from the toy and swallowed by a child.
\nQuarterly British retail sales, from July to September, increased by 1.7 per cent compared to a 1.3 per cent rise in the three months to August and 0.5 per cent growth in the period to July. The 1.7 per cent increase is the largest rise since July 2006 \u2013 the month before the Bank of England began increasing the UK interest rate.
\nPrices of goods fell by the sharpest rate since January 2005 as retailers cut prices to tempt shoppers back to the high street after the summer\u2019s dismal weather.
\nHowever, analysts expect spending to slow as consumers tighten their belts given rising UK debt levels \u2013 UK consumer debt reached \u00a3215 billion in August – and the slowing housing market.<\/p>\n

Best answer:<\/strong><\/p>\n

Answer by Genki<\/i>
If consumers are spending, it is likely that inflation will occur. By keeping interest rates (the cost of credit) up, the idea is to restrict spending just enough to limit inflation.<\/p>\n

If consumers are spending, they are happy with the prices and there is no need to lower the cost of money. If consumers are not spending enough, the cost of credit is too high and rates will be lowered to make it easier for them to buy more.<\/p>\n

Add your own answer in the comments!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Question by i am confused o_O: Why Monetary Policy Committee is unlikely to cut interest rates when consumer spending is increasing? British retail sales jumped by 6.3 per cent in September as consumers, concerned by the product recall from Mattel, bought toys and games while taking advantage of heavy discounting on the high street. The […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[431,15,436,433,429,430,434,435,432],"class_list":["post-128","post","type-post","status-publish","format-standard","hentry","category-recalls","tag-committee","tag-consumer","tag-increasing","tag-interest","tag-monetary","tag-policy","tag-rates","tag-spending","tag-unlikely"],"_links":{"self":[{"href":"https:\/\/www.faultorfeature.com\/index.php?rest_route=\/wp\/v2\/posts\/128","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.faultorfeature.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.faultorfeature.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.faultorfeature.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.faultorfeature.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=128"}],"version-history":[{"count":0,"href":"https:\/\/www.faultorfeature.com\/index.php?rest_route=\/wp\/v2\/posts\/128\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.faultorfeature.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=128"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.faultorfeature.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=128"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.faultorfeature.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=128"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}