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gruffydd

Boe Just Wrote To Me

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Dear Mr ...Cynan

Given your well known views regarding inflation you will, of course, have been disappointed by today's MPC decision to cut interest rates by 0.25%. However, I would like to assure you that the MPC are very aware of the possibility of future inflationary pressures. Indeed they have alluded to this possibility in the statement that accompanied the announcement about the decision. They said:

'In the first half of the year, output growth in the United Kingdom was subdued. Household spending and business investment growth have slowed. Although there are some signs of a pickup in consumer spending, downside risks remain in the near term. Looking further ahead, however, the rise in equity prices and the recent fall in the exchange rate should boost activity.

CPI inflation was 2.0% in June. Higher oil prices may raise inflation further in the short term. But, in the Committee's view, the slackening in the pressure of demand on supply capacity should lead to some moderation in inflation.'

As you can see, on balance, the MPC concluded that a quarter percent reduction in rates now was required given the slowdown in the economy.

As I mentioned in my previous e-mail, the Bank's view on the prospects for inflation will be covered in detail when we release the Inflation Report (next week). I am sure you will find it of interest and you will be able to access it via our website as soon as it is released.

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Very interesting quote about oil supply and demand

"Higher oil prices may raise inflation further in the short term. But, in the Committee's view, the slackening in the pressure of demand on supply capacity should lead to some moderation in inflation."

So everyone on this site bleating on about high inflation equals interest rate rises had better start thinking if inflation really is just around the corner. No inflation equals no rises.

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CPI inflation was 2.0% in June. Higher oil prices may raise inflation further in the short term. But, in the Committee's view, the slackening in the pressure of demand on supply capacity should lead to some moderation in inflation.'

No mention of the revaluation of the yuan then. Is it too much too ask for the country's central bank to pay attention to the macro exchange rate environment (rather than a myopic obssession with the trade-weighted value of sterling)? :rolleyes:

Edited by zzg113

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So everyone on this site bleating on about high inflation equals interest rate rises had better start thinking if inflation really is just around the corner. No inflation equals no rises.

2% is the 2-year target - if you look back 6 months then at this stage they were expecting inflation at 1.6% - we are well above that

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YES!!! What is the email of the Boe???? Can someone post it please -- they need  lesons in reality to be BOMARDED upon them....................

Given the quality of your post I'd humbly suggest your EMails would go straight into the bin.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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