For those inclined to further weakening of monetary policy, yesterday's data on retail sales in Britain have given additional impetus. In September, retail sales fell a second straight month, falling by 0.2%, while the drop last month was revised from 0.5% to 0.7%. Several categories have experienced the greatest weakness: clothing / footwear, and fuel for vehicles. The latter is especially interesting, because last year the demand for fuel dropped almost 13%, which was a response to rising prices at the pump and tighter budgets of households. For the quarter as a whole, the overall picture was more encouraging with an increase of 1%, although this says more about a good sale in late spring and early summer.On the other hand, the number of approved applications under the mortgage was 44.000 in September that was the 17-month lows as home buyers put off purchases to the review of expenditures and on the background of a growing number of reports about declining home prices. As the pound and UK gilts yield decreased due to news, where the yield of ten-year securities fell by 8 basis points up 2.90% at some point.
Yesterday's speech the Chancellor that the MPC can help avoid any unpleasant consequences for the growth coming out of the package tightening, helped move the curve as a whole, though the yield of the two-year gilts remained a record low. Chancellor and Mervyn King are very similar views on fiscal policy, thus, no doubt, the latter feared would be the fact that, according to the first, will lead the economy down.
Representatives of the BOE keep defense. Member of the Monetary Committee, David Miles, in an article published in the Sentinel, echoed sentiments expressed in recent protocols MPC, acknowledging that monetary policy was "extraordinarily expansionary, with a high risk that things could go worse. It was generally cautiously optimistic about the economy, but said that the Bank of England is still enough arms available. Later, the chief economist Spencer Dale BOE noted that the central bank must be ready to move in any direction, which again coincided with the tone, expressed in the minutes.
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