Surprise fall in CPI inflation in UK

There was an unexpected fall in the Consumer Prices Index (CPI) in May to 2.8%, from 3.0% in April. This brought UK inflation to its lowest level in two and a half years. There was also a fall in the Retail Prices Index (RPI) over the same months, from 3.5% to 3.1%. It was only in September last year that … Continue reading

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A downside to Quantitative Easing?

Pension funds are being hit, and hit hard, by quantitative easing (QE), according to the National Association of Pension Funds (NAPF). The process of QE instituted by the Bank of England in 2009, involves creating money to buy up government bonds. The purpose of this was to put more liquidity into the banks to improve their balance sheets and to … Continue reading

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UK to experience double-dip recession

In its latest Economic Outlook, the OECD forecasts that both the UK and the eurozone could see a double-dip recession over the next few months. The organisation has slashed its forecast for UK growth in 2012 to only 0.5%. It also believes that growth in the current quarter could be negative at -0.03% and in the first quarter of 2012 … Continue reading

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Has Quantitative Easing actually worked?

 The Bank of England introduced the so-called scheme of Quantitative Easing (QE) in March 2009 and it continued until January 2010. This was an attempt to inject money directly into the economy by buying financial assets on the open market, largely government and corporate bonds. It was introduced because the price of money (Bank Rate) was not working sufficiently to … Continue reading

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The economic recovery is close to flatlining

 Economic recovery appears to have come close to a halt in the major industrialised economies, with falling household and business confidence affecting both world trade and employment, according to new analysis from the OECD. Growth remains strong in most emerging economies, albeit at a more moderate pace.   “Growth is turning out to be much slower than we thought three … Continue reading

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Trade slows in major economies

Merchandise trade growth slowed across major economies in the second quarter of 2011, according to figures just released by the OECD. Total imports of G7 and BRICS countries grew by only 1.1% in the second quarter compared to 10.1% in the previous quarter. Total export growth slowed to 1.9%, compared to 7.7% in the previous quarter. China’s imports grew by … 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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Sterling, economic growth and interest rates

One immediate effect of the 0.8% rise in UK economic growth during the third quarter, which was announced yesterday, was an upward valuation in sterling. The pound rose by about 1.5 cents against the dollar and stands at $1.5814 this morning, according to Reuters. The pound has now risen by almost 2 cents this week. The story is the same … Continue reading

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Inflation above target for 10 consecutive months

I remember hearing a story in the US of a barn which was covered in targets and each target had a bullet hole straight through the middle. A passing tourist was really impressed until the farmer told him that he just shot into the barn at random and then placed the target around the bullet hole. Perhaps it is time … Continue reading

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The Bank eases up on quantitative easing

The Bank of England decided yesterday that they would call a halt to their experimental, not to say unprecedented, policy of quantitative easing (QE). QE was started in March 2009 and over the following months the Bank bought up £200bn of gilts in the open market from banks and financial institutions. This was aimed at preventing the economy falling into … Continue reading

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