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Category Archives: Monetary Policy Committee

Big rise in inflation and heartfelt apologies from Mr King

Look away now if you are of a nervous disposition. Latest figures from the ONS this morning show that CPI annual inflation reached 4.5% in April, up from 4.0% in March. The only time CPI inflation was higher than this was in September 2008 when it reached 5.2% which was a record high. The RPI figure came in at 5.3% … Continue reading

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UK Manufacturing grinds to a halt

Manufacturing has been driving our economic recovery, such as it is, and was expected to continue to do so. But, there is bad news. Although manufacturing output grew by 0.9% in January, it failed to grow at all in February. Alan Clarke, UK economist at BNP Paribas, was quoted as saying that the data was “bitterly disappointing”. The wider measure … Continue reading

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The UK’s Inflation Problem: Selling England by the Pound?

This is the title of a speech which Andrew Sentence, of the Bank of England’s Monetary Policy Committee has just given. He is diametrically opposed to Mervyn King’s analysis of the current situation, believing that current levels of inflation are not temporary; that interest rates need to be raised; and, that in not taking action now the Bank is putting … Continue reading

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Inflation continues to climb

CPI annual inflation was 4.0% in January, rising from 3.7% in December, according to figures released by the ONS today. The ONS said that: “Two of the main factors that had an impact on the January data are the increase in the standard rate of Value Added Tax (VAT) to 20 per cent and the continued increase in the price … Continue reading

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Squeeze on living standards is inevitable says Merv

“In 2011, real wages are likely to be no higher than they were in 2005. One has to go back to the 1920s to find a time when real wages fell over a period of six years.” “The squeeze on living standards is the inevitable price to pay for the financial crisis and subsequent rebalancing of the world and UK … Continue reading

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Continued rise in UK producer prices

Output price inflation rose to 4.2% in December 2010 according to the Office for National Statistics.  This is sometimes referred to as ‘factory gate’ annual inflation, and measures the output prices that manufacturers sell their products at. The rise on the month was 0.5% which is considered quite significant. At the same time, input price annual inflation rose by 12.5% … Continue reading

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House prices are now 18% below their pre-recession peak

House prices fell 1.3% between November and December 2010 according to the Halifax. This meant a further fall of about £2,000 in the average price of a house, which now stands at £163,435. Overall, there was a fall in prices of 1.6% over 2010 as a whole, and house prices are now about 18% below their peak in the third … Continue reading

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Inflation keeps on rising

CPI annual inflation was 3.2% in October, up from 3.1% in September, to take it to a four month high. However, RPI inflation which includes mortgage interest costs and has a larger element of housing costs than the CPI, actually fell from 4.6% in September to 4.5% in October. The recent trend can be seen in the Table below.   … Continue reading

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“We’re absolutely certain that nobody knows what’s going to happen.”

This could have been the headline from the Bank of England’s November Inflation Report that was published this morning. All in all, it was riddled with uncertainty. Mr King, the governor of the Bank, said that given the slower growth in government spending, the strength of any recovery depended heavily on what was happening externally. He said: “The biggest …. … Continue reading

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QE too?

Yesterday, the US Federal Reserve announced that it was introducing its second round of quantitative easing, by pumping $600bn (£373bn) into its economy by the end of June 2011. Will the Monetary Policy Committee of the Bank of England follow suit? The answer for the meantime is ‘no’. Today they decided to keep interest rates on hold at 0.5% for … Continue reading

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