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 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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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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