Monday, Feb 11, 2008
Significant chance that CPI will rise above 3pc, forcing the Governor to write a letter of explanation to the Chancellor
Telegraph: Bank of England likely to miss inflation target
The Bank of England will use this week's closely-watched Inflation Report to warn of a high probability that it could miss its inflation target in the coming months. The Bank, which last week cut interest rates by a quarter percentage point to 5.25pc, is expected to raise its near term projection for the Consumer Price Index, implying a significant chance that it will rise above 3pc, forcing the Governor to write a letter of explanation to the Chancellor.
Posted by jack c @ 09:46 AM (526 views) Add Comment
4 Comments
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1. hpwatcher said...
"It does suggest that the UK is entering a period of slower employment growth and somewhat greater job insecurity than in recent years."
SOUND FUNDAMENTALS = words, nothing more.
2. cyril said...
Slower employment growth? Surely they mean growing unemployment?
3. paul said...
But the MPC said in their last letter to the chancellor that the outlook for inflation was overwhelmingly benign, and that (by now) inflation should have fallen back broadly in line with their expectations.
Does this mean that the MPC were wrong, and that they've been making it up all along, and deceiving us?
O RLY?
4. rickyb said...
The CPI fan charts that the BoE publish as part of their inflation reports are always quite comical. They invariably show the central projection approaching 2% within a month or so of publication, with "interest rates in line with market expectations". Unfortunately, I don't think interest rate changes now will have much impact on the current inflation rate, as the time lag is just too long, but the lower they go now, the more problems they are storing up for the future.