Tuesday, Feb 27, 2007
Inflation could head back towards MPC target
Guardian: Falling energy prices force down inflation
The Monetary Policy Committee are split over the direction the economy will take in the coming months, says member David Blanchflower. His personal viwe is that inlflation will drop back towards target levels with dropping energy prices.
Posted by jellycaster @ 08:47 AM (169 views) Add Comment
12 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. holding out said...
I can't help but notice that in the article they refer to him as the old Spurs boss Danny Blanchflower. You know of course that it isn't him because he's got more financial acumen.
2. inbreda said...
The fact that massive increases in energy prices didn't make much difference to inflation, but when they fall back a bit it is supposed to cause inflation to fall makes me wonder whether this is just VERY bad journalism or it makes me paranoid of a conspiracy.
3. bingo said...
I'm not sure where everyone sees this reduction in energy prices, oil prices appear to be persisting at around the 60 dollar mark and as yet no one has benefitted from cheaper gas prices and further, no one will benefit from lower cost gas until the summer months (when you kinda don't need it anymore). As far as futures, oil is on very shaky ground (no pun) with the escalation of the Iran situation. I certainly wouldn't ignore the warning signs there, they are very real indeed and the whole thing could kick off in a heartbeat.
4. waitingfor hpc said...
Inbreda - I agree totally. It seems anything that goes down is in the basket!!! I have been looking at cars and they have shot up in price!
5. harold said...
What a shame then for David Blanchflower that oil has pole-vaulted back over $60 a barrel. Still, I don't expect it will make much difference to David Blanchflower; his mind is already clearly made up. Objective economist - I think not.
6. Mrphil said...
I agree, how can we have high oil prices for more than a year, much of which was double the long term average, which barely started to feed into factory output prices, yet as soon as they drop a little (but remain higher than normal - $60/barrel currently) suddenly we have dropping inflation again. So let me get this right, it takes a year a more to have an upward effect, but a couple of days to have a downward effect?
Ridiculous.
7. Rickyb said...
Falling energy prices will not, as many would think, push inflation down, in the same way that increasing energy prices did not have a significant effect on increasing inflation. The reason for this is that as energy prices increase, less money becomes available for other goods and services, and so the average price for these other goods and service tends to regulate the average inflation rate. However, with the recent rapid increases in money supply, and now falling energy prices, more money will become available for the other non-energy goods and services. Perversely, the recent decreases in energy prices, will actually have the opposite effect and increase inflationary pressures.
8. David said...
This all points to interest rates peaking at around 5.5% then dropping down to under 5% after inflation drops back.
9. Sam said...
Agreed, that the price of gas goes down when you don't really need it so it doesn't really effect you unless of course you have a gas powered bbq.
oil actaully goes up in prices over the summer months. thanks to the americans going on their driving holidays.
10. Surfgatinho said...
David Blanchflower is the biggest idiot on the MPC. His head is wedged firmly up his fundament!
11. Ticktock said...
David,
Are you the Brown appointed Yank himself? Nothing at all points to such a thing!I
inflation will continue to rise because the BOE (post de-regulation of financial industry) has absolutely no control over the growth in credit, cannot bring themselves to pop the housing bubble (and stop MEW), nor stop printing paper with the queens face on it.
Too much money chasing too few assets = price inflation. Therefore rising prices are simply the concequence of 'inflation' and not 'inflation' itself. The 'cause' of inflation is actually quite simple but not easily preventable, and certainly not preventable now - the damage has already been done, now the concequences will follow and many 'optimists' are going to get burned.
12. Davros said...
> This all points to interest rates peaking at around 5.5% then dropping down to under 5% after inflation drops back.
Says who? Interest rates were lowered to stimulate a faltering economy. They're being raised to reign in the economy. Are you saying later in the year the economy will be in trouble? In which case, it doesn't look good for houseprices does it?