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80sBaby

Signs Of Us Inflation....where The Us Leads, Uk Follows

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how long would it likely take for carnage to have no option but to raise rates here if they went up right now in the US? months, years? given that there's no precedent who bloody knows :(

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Given that carney has already said he will "look through" (ie ignore) any UK inflation, the chances of him and the boe paying any attention to what is happening in the U.S. are slim, especially if U.S. policy doesn't agree with the current boe agenda.

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Given that carney has already said he will "look through" (ie ignore) any UK inflation, the chances of him and the boe paying any attention to what is happening in the U.S. are slim, especially if U.S. policy doesn't agree with the current boe agenda.

If he's said that, i'd say it almost guarantees a UK rate hike. :)

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Inflation would have to be trending up in the US to be used as justification for a rate rise in the US - one increase which might just be in isolation isn't enough. Although one never knows for certain.

The BoE was quite content to see inflation rise to about 5% without increasing interest rates after the economic collapse (in 2008 and 2011 - similar to the US) so a small increase in US inflation isn't likely to make much difference to their decisions - for sure they'll register it and if it does trend up in the US then it'll likely start to trend up in Britain soon as well - and elsewhere around the world.

One assumes that as their official story is one of strong economic recovery in Britain and recently despite the Brexit vote (their predictions are usually wrong but they'll say anything) then it's unlikely that they would be able to allow anywhere near 5% inflation before starting to increase the base rate but they might well allow it to persist a bit over the inflation remit before increasing. Currently official CPI is 0.6% so still a way to go.

They also have to be aware of the political risks these days as along with the economic collapse the easy abandonment of the remit figure changed a lot of people's perception of the BoE and its competence as well as where its interests are when it became clear very quickly and in recent years increasingly so that they are just as keen on trousering and own pocket lining as the rest of their chums (not to mention all the statistical manipulation of the inflation indices). Simultaneously they lost all credibility.

Edited by billybong

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The only inflation that worries the central banks is wage inflation. Can't have that.

No they would love wage inflation.....but the economy can't afford it. ;)

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US CPI surprises to the upside. This raises the probability of a US interest rate rise, which will feed into stronger dollar and inflationary pressures globally. This could be the end of NIRP and HPI

http://bloom.bg/2cOnjtH

CB policy tends to be that 2% is a medium/long run target for inflation. So, if inflation has been below target for some time then in order to meet the long run average 2% goal it needs to be above 2% for some time before action would be taken.

Not saying I agree with the policy, but that's the general gist of it.

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