Boe Inflation Report

[getdoon_weebobby]

No-one ever seems to ask the obvious question:

"What makes you think that pursuing a 2% CPI inflation target will lead to a stable economy and financial system when quite patently such a policy has done nothing of the sort over the past decade?"

GET YOURSELF INTO THE NEXT PRESS CONFERENCE

[@contradevian]

Erm, anyone else having trouble accessing the site?

Has the BoE crashed?

Maybe the BoE server needs to some quantitively eased RAM!

[D.C.]

No-one ever seems to ask the obvious question:

"What makes you think that pursuing a 2% CPI inflation target will lead to a stable economy and financial system when quite patently such a policy has done nothing of the sort over the past decade?"

Good point.

And your graph is prettier

[Willy Weasel]

I haven't bothered to read this thread but I just wanted to make the point that having watched the whole of the online webcast, Mervyn King once again struck me as a man in total command of his subject. If there's anyone in this sorry mess who knows what he's doing it's him

[piece of paper]

There ya go

Well, thank you both. As you have the ttime, could you email a copy to the BoE inviting comment on the accuracy of their predictions?

p-o-p

[Blue Peter]

No-one ever seems to ask the obvious question:

"What makes you think that pursuing a 2% CPI inflation target will lead to a stable economy and financial system when quite patently such a policy has done nothing of the sort over the past decade?"

Presumably, if he didn't dodge the question, he would offer the "it's my mandate" defence.

It's clear now that the last few years have been a monumental cattle truck up on the financial front, and he was in one of the ringside seats. It's not clear to what extent he was working to prevent the catastrophe,

Peter.

[Willy Weasel]

No-one ever seems to ask the obvious question:

"What makes you think that pursuing a 2% CPI inflation target will lead to a stable economy and financial system when quite patently such a policy has done nothing of the sort over the past decade?"

Two points:

1. The question needs to be directed at the Government rather than the BoE as it is the Government that requires the BoE to meet that target.

2. The level of inflation and the stability of the financial system are two different issues. You could have inflation at 20% and have a stable financial system or inflation at 1% and have an unstable financial system.

[Timm]

I haven't bothered to read this thread but I just wanted to make the point that having watched the whole of the online webcast, Mervyn King once again struck me as a man in total command of his subject. If there's anyone in this sorry mess who knows what he's doing it's him

If there's anyone in this sorry mess who neads to avoid walks in the wood, it's him.

[Ash4781]

I think it's out today - I'm getting very excited!! I heard Mervyn has ordered some especially large fan charts.

It's a grim read. edit: Looks like Japan style bust all the way!

Edited August 12, 2009 by Ash4781

[FreeTrader]

Two points:

1. The question needs to be directed at the Government rather than the BoE as it is the Government that requires the BoE to meet that target.

This is the "I'm only obeying orders" defence and it doesn't wash. It was academic economists such as those at the BoE who promoted the idea that inflation targeting would produce stable economic growth. Those same economists could soon overturn that doctrine if they wished.

2. The level of inflation and the stability of the financial system are two different issues. You could have inflation at 20% and have a stable financial system or inflation at 1% and have an unstable financial system.

They aren't two different issues if the pursuit of a nominal consumer price inflation target results in a monetary policy which encourages excessive leverage and risk-taking in the financial system.

[Guest Daddy Bear]

The bank’s forecasts...........

I could not read any further as my lower duodenum rose out of my oesophagus through laughing too much....

[Bloo Loo]

I could not read any further as my lower duodenum rose out of my oesophagus through laughing too much....

well, THEY are the ones that decide to print or not.

[Charterhouse]

This is the "I'm only obeying orders" defence and it doesn't wash. It was academic economists such as those at the BoE who promoted the idea that inflation targeting would produce stable economic growth. Those same economists could soon overturn that doctrine if they wished

Paul Volcker. Nothing to do with BoE. But it's accepted as common wisdom because of the naturally destabilising effect of rapidly changing prices in either direction.

[A.steve]

I've just been reading this summary. Having lazily avoided watching the presentation and reading the report in full.

The reuters summary raised a few interesting questions for me:

Total money spending in the four quarters to 2009 Q1 fell by 4%. A fall of that magnitude has occurred in only two other episodes since 1900, and, if it persisted, would be inconsistent with meeting the inflation target in the medium term.

First, what is meant by "total money spending" - what metric is that (is it available as a BoE stat.)? Can we track this over time as an economic indicator? How is it calculated?

Second, if this statistic has only fallen by 4%/anm twice in over a century, when specifically did this happen?

Edited August 12, 2009 by A.steve

[Fairies Wear Boots]

So CPI last month 1.9 percent, which was descibed as surprising high and they expected it to be less. This month 1.8.

I'm quite glad that this ravaging deflation forecast hasn't quite arrived yet.

[Bloo Loo]

So CPI last month 1.9 percent, which was descibed as surprising high and they expected it to be less. This month 1.8.

I'm quite glad that this ravaging deflation forecast hasn't quite arrived yet.

the BoE have a task to target CPI to 2%.

if it falls much further, they will take measures to take it up again.

My own CPI is 6.9% food only.

[piece of paper]

the BoE have a task to target CPI to 2%.

if it falls much further, they will take measures to take it up again.

My own CPI is 6.9% food only.

I should give your daughter in France forewarning about the poo in the next aid package. Otherwise she make think that the relationship has changed.

p-o-p

[CrashConnoisseur]

1. The question needs to be directed at the Government rather than the BoE as it is the Government that requires the BoE to meet that target.

Indeed, the Treasury are responsible for setting monetary policy; the BoE merely implements it.

2. The level of inflation and the stability of the financial system are two different issues. You could have inflation at 20% and have a stable financial system or inflation at 1% and have an unstable financial system.

In the UK we had both at the same time; 20% HPI with 1% CPI.

[Fudge]

So CPI last month 1.9 percent, which was descibed as surprising high and they expected it to be less. This month 1.8.

I'm quite glad that this ravaging deflation forecast hasn't quite arrived yet.

Swervin Mervyn said that he expected to have to write another letter to the Chancellor explaining why CPI

is 1% below target.

This hyperinflation is a bummer.

[getdoon_weebobby]

I've just been reading this summary. Having lazily avoided watching the presentation and reading the report in full.

The reuters summary raised a few interesting questions for me:

First, what is meant by "total money spending" - what metric is that (is it available as a BoE stat.)? Can we track this over time as an economic indicator? How is it calculated?

Second, if this statistic has only fallen by 4%/anm twice in over a century, when specifically did this happen?

1929-33 hopefully ?!!

[XswampyX]

In all it's glory.

The blue chart is the latest. It's uncanny how it hardly deviates from the projection.

[Daft Boy]

Mervyn King once again struck me as a man in total command of his subject. If there's anyone in this sorry mess who knows what he's doing it's him

Thats what they said about the captain of the titanic on his appointment to the post

[Take Me Back To London!]

Swervin Mervyn said that he expected to have to write another letter to the Chancellor explaining why CPI

is 1% below target.

This hyperinflation is a bummer.

I have been waiting ages and ages for deflation to boost my savings. How long have they been going on about deflation?

1.8% CPI is very deflationary.

They better put VAT back up.

[Fudge]

I have been waiting ages and ages for deflation to boost my savings. How long have they been going on about deflation?

1.8% CPI is very deflationary.

They better put VAT back up.

Considering that they have cut interest rates as low as they can and and now just printing money

and throwing it around, they are still losing the battle against deflation.

[nohpc]

The bank’s forecasts, which are published as fan charts, show keeping the benchmark rate at 0.5 percent until at least the end of 2012 would see inflation approach 2 percent by the end of the period. Raising the rate above 1 percent in the second quarter as assumed by investors would see inflation clearly undershoot the target, the projections show.

Bloomberg

Just thought I'd let you know.

Daddy Bear are you watching? (there might be a song in that)

Interest rates to stay at 0.5% till 2012. I have been laughed at for stating such an obvious prediction for the last few months. Luckily I put my money where my mouth is and stuck with my lifetime tracker + 1.5%

So CPI last month 1.9 percent, which was descibed as surprising high and they expected it to be less. This month 1.8.

I'm quite glad that this ravaging deflation forecast hasn't quite arrived yet.

deflation hasn't occured because of the actions taken already. What do you think the CPI would be without QE and ZIRP? -5 to -10% at the best I think.