Mr. Bean: Inflation May Cause Prices To Rise

[Realistbear]

http://www.bloomberg.com/news/2010-12-13/bean-says-u-k-inflation-strength-raises-risk-of-higher-price-expectations.html

Bean Says U.K. Inflation Strength Raises Risk of Higher Price Expectations

By Svenja O’Donnell and Scott Hamilton - Dec 13, 2010 1:29 PM GMT

Bank of England Deputy Governor Charles Bean said the

strength of inflation has increased the risk to price expectations

and there may also be less spare capacity in the economy than previously assumed.

“Given the unexpected strength of inflation in recent months, this risk has probably increased of late,” Bean said in a speech at an event organized by Market News International in London today. “We shall be watching these indicators, and their impact on wages and prices, like proverbial hawks.”

And, as always, they will remain "vigilant" (do nothing in case it causes a drop in house prices). The "proverbial hawks" must be blindfolded ones. As most economists know, you have to use pre-emptory strikes to prevent inflation which does not respond well to reactive policies.

[catmandu]

This is the kind of insightful analysis that we desperately need. I cannot find a flaw in Mr Bean's theory, and am delightful that he is vigilantly doing nothing.

[siskin]

Article continues:

There are still risks “to both sides” of the economic outlook, Bean said in answer to questions, adding that an “unhappy” outcome to the euro-area crisis may yet trigger an increase in so-called quantitative easing.

“It is certainly possible we may want to undertake a second round of QE if the outlook for U.K. growth and inflation prospects is slowing,” he said.

More of the same old lies and waffle.

[Pent Up]

Surely he is not casting doubt on mervs magical, mythical spare capacity?

The thing is they need to preempt an increase in inflation expectations. If they let them rise before acting then it can be very costly to bring them back under control, by mervs own admission.

More evidence that interest rate rise could be just round the corner.

[jammo]

This is the kind of insightful analysis that we desperately need. I cannot find a flaw in Mr Bean's theory, and am delightful that he is vigilantly doing nothing.

Not quite. Quantitative easing (according to Viz) is another way of saying having a w**k.