The Bank of England is about to make a big mistake on interest rates 📧 Read HamishMcRae5's latest newsletter
that it is a bit stronger than the Bank thought a month earlier, and that is in line with private sector forecasts. But you don’t want a dump of snow on it right now because that could choke off growth, and the danger is that we will get that dump next week in, and again the week after when the Bank’s monetary policy committee next meets to decide on interest rates.
In any case, the bigger impact on the economy will be what happens to interest rates. Here, I am worried the Bank of England will make a mistake. So too is Andy Haldane, who was its chief economist until June 2021, when he left to become chief executive of the Royal Society of Arts. He was one of the “hawks” of the monetary policy committee, rightly as it turned out, pushing the policy of increasing interest rates early to head off inflation.
So how do you encourage people, particularly young people, to distinguish truth from propaganda? Harford’s answer is you teach them to become detectives. Among the things they have to look out for include correlation not being causation, the way in which short-term comparisons don’t matter but long-term ones do, and the examples where thoughtful analysis of statistics has saved lives.
On short-term comparisons, he points out that it does not matter how much a child grows each day, because it is tiny, but it does matter how much they grow each year. You can apply that our preoccupation from monthly economics statistics, that usually turn out to be wrong anyway.
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