Monetary Policy Committee member Adam Posen says concerns about the size of the Fed’s balance sheet in regard to quantitative easing is a “shibboleth”.
Webster defines a shibboleth as a : a word or saying used by adherents of a party, sect, or belief and usually regarded by others as empty of real meaning.
I guess that’s a polite way of saying its bullshit.
Posen has more regard for inflation expectations, which he says matter hugely, according to Reuters. Yield targeting would not be his preferred next step after quantitative easing. (I think he is talking about the US here, but there is no real context from the headlines…could be talking about the UK…)
To a degree, the BOE can explain the rise in inflation to a shock. It need not over react. I guess what he’s saying is that comparisons to very weak data last year (during the shock) account for the pop in UK inflation this year.
