By some estimates, if the imploding financial sector and declining North Sea oil production are excepted then Great Britain's economic output is actually at the same levels as before the onset of the financial crisis. No mean feat really.

However, if the above are included then the United Kingdom's economy is now stagnant and still trying to clamber out of the crater left by the 2007-2008 financial meltdown.

It is in large part against the above backdrop, and foot-dragging on critical macroeconomic reforms in the Eurozone, that investors have in recent times begun to speculate that Bank of England Governor-in-waiting Mark Carney could soon embark on fresh and aggressive measures to give economic activity a 'leg-up.'

Hence the keen interest in his testimony this morning, at 09:45, before the Treasury Select Committee.

According to economists at Barclays Research the monetary policy options expected to be under discussion today are: nominal GDP targeting; more flexibility on inflation tolerance; forward rate guidance; and non-gilt asset purchases.

As regards the former, these economists - at least - believe that any formal discussion is 'highly unlikely' as it is poorly understood in the public and provides infrequent data points of analysis.

More flexibility on inflation tolerance and forward rate guidance do seem to be a distinct possibility however, they judge. Nevertheless, and to be had in account, Barclays also thinks those potential announcements have been well flagged. Thus, the risks for Sterling's reaction during the meeting may actually lie to the upside.

The above view - roughly - is shared by Kathleen Brooks, Research Director at Forex.com, who yesterday evening wrote to clients telling them that: "We believe there is a chance the Governor-elect will be more neutral than the market expects. He may take the pragmatic route, saying that he will adjust policy according to the economic situation at the time. Carney may also elaborate on how the BoE could target GDP at the same time as keeping inflation under control.

"From a diplomatic perspective, we don't think he will want to ruffle feathers at the BoE before he starts, and since the current MPC targets inflation he may not want to suggest something completely new to politicians before he has had his first meeting as Governor. "

In a rather more aggressive manner, speaking this morning on Bloomberg TV ex-Monetary Policy Committee member David Blanchflower has talked of the need to recognise that in a sense we are in 'QE -wars.'

Perhaps as a sign of the times in which we live, he also talks of the possibility of 'non-conventional QE.'

Intriguingly, although his appears to be a minority view, Blanchflower also stated that the chance of the Monetary Policy Committee taking some sort of action today was 'non-zero.'

For their part, over at The Economist they ask Mr.Carney to 'Shake'em up,' arguing last Friday that achieving a 10% increase in gross domestic product (GDP) by means of 'inflation targeting' is a fairly conservative and clear target. "Adopting it would be better for the Bank's credibility than repeatedly missing the inflation target," the magazine held.

AB

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