The MPC might as well get on with it

Don't be surprised if the Bank of England cuts interest rates today. There is a far greater chance of lower borrowing costs by tonight than the City's finest economists believe.

The consensus among these economists was that the earliest a cut might come was August. Until a few weeks ago some were still forecasting end-year rates of 5% or higher as the Bank continued to rein in consumer spending and the housing market .

The economy, though, has turned around far more quickly than the Bank and many in the City had expected or assumed.

Indeed, the National Institute of Economic and Social Research, which until two months ago was urging the Bank to raise rates, called yesterday for a cut. It estimates that the economy grew by only 0.3% in the second quarter - just half its long-term average.

The Bank's monetary policy committee loves to be "ahead of the curve", as the jargon has it - meaning if things are changing, it likes to respond quickly and decisively rather than sit on its hands and wait to see what happens.

In May, one MPC member was voting to raise rates. But last month two, including Charlie Bean, chief economist, voted for a cut, concerned about the rapid slowdown in consumer spending.

Indeed, the main reason the majority of the nine-member committee gave last time for not cutting rates was that it would be too much of a surprise for the financial markets. A cut today, however, would not really surprise anyone.

The economic data have been almost universally gloomy since last month's MPC meeting, especially on the consumer sector, as yesterday's mortgage equity withdrawal and car sales figures showed.

The argument that the MPC will wait until August to cut the price of money hinges on the fact that it will then have its new quarterly inflation and growth forecasts ready. But Mr Bean is responsible for the inflation report and he has in effect told us already that next month's will be weaker than May's.

The MPC has already signalled rate cuts are round the corner. It might as well get on with it.

Exxon half-truths


Its easy to caricature Lee Raymond, the Exxon boss, as a dinosaur, as his environmentalist critics so often do.

The ageing Texan oilman - chairman and chief executive of the largest publicly quoted petroleum group in the world - seems to come from a lost hydrocarbon kingdom where big is always beautiful.

But the landscape has changed. This time, however, it is not due to a crashing meteor from outer space that most probably wiped out the diplodocus by changing the Earth's temperature - but from the human activity that has created global warming.

Now most modern moguls in the oil industry - think John Browne at BP or Lord Oxburgh at Shell - talk about carbon emissions as much as they do about oil refineries. They also speak the politically correct language of corporate social responsibility, even if they still build controversial pipelines from Azerbaijan and flare off gas in Nigeria.

Not Mr Raymond.

His company has been irked by the Stop Esso campaign and has been on a huge public relations offensive trying to convince us that it has been misunderstood. Full-page newspaper adverts have been taken out, journalists have been lunched and academics hired for research projects.

But every time Mr Raymond gets in front of a microphone or tape recorder - even in the unedited pages of his own in-house magazine - he confirms all the old prejudices.

He says wind and solar power is "inconsequential" and argues that people focus too much on them, especially as they are not economic. Anyhow, they will only provide 1% of the world's total energy needs by 2030, he argues.

As for the environmentally sensitive Arctic Natural Wildlife Refuge, it makes no sense to ignore what it holds. The whole energy/ecology debate, he says, has too much "inflamed rhetoric".

There is a smidgen of truth in what he says - in the sense that the world will continue to run on oil and gas for many years without an enormous amount of political or public time and effort going in to where those supplies will come from. But Mr Raymond's complaint that renewables are "uneconomic" and will provide only 1% of energy needs by 2030 are respectively a half-truth and just wrong.

The International Energy Agency puts renewables at 9% worldwide already and expects this figure to double within 25 years. He also forgets to mention that the greenhouse gas emissions from burning fossil fuels are not paid for - except in planetary damage.

You might trust someone to look for oil in the Arctic under exceptional circumstances but surely not a company that employs a White House official who has just departed after doctoring reports playing down climate change.

Mr Raymond has ruled Exxon with an iron glove but is now well past retirement age. The baton must surely soon be passed to someone more in tune with the 21st century before a public relations meteor finally blasts him away too.