Former Bank of England Member: The Fed Is on the Back Foot

Andrew Sentance, senior economic adviser at PwC and a former member of the Bank of England Monetary Policy Committee, writes in FT:

The discussion of UK and US monetary policy is taking place on the basis of a false premise — that we can maintain near-zero official rates indefinitely — and that this would somehow be a satisfactory basis for economic growth over the medium term. I do not believe that, and I do not meet many people in the business and financial world who do either...

There is another opportunity to start the process of raising rates in October. However — in cricketing parlance — the Fed is now on the back foot. Their decisions are getting behind the curve. A sharp interest rate correction between 2016 and 2018 is becoming increasingly likely.

  -RW