W
hat is the right interest rate for the UK economy? Economic commentary on this issue is almost entirely seen through the lens of whether the official Bank of England rate is too high, or too low. With exactly a month to go until the next decision from the monetary policy committee the debate again centres on the wisdom of moving from its existing level of 5.25 per cent. Whether the economy is best served over the coming couple of years by lower borrowing costs and lower savings rates or by a more aggressive fight against inflation is seen as the key judgment.
These are arguments on incremental changes, however, rather than levels. Rarely does the financial news cycle provide the space to step back and
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