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David Walton From The Mpc Has Been Speaking Tonight

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Speaking at the University of Warwick Graduates’ Association Senior Directors’ Forum, David Walton, member of the Monetary Policy Committee, said that the UK economy appears to have emerged relatively unscathed from a doubling in oil prices since the end of 2003.

For Mr Walton, in explaining this fairly benign outcome relative to previous episodes of rising oil prices, “the size and nature of the oil price shock are important. But so too are the mechanisms by which the shock gets propagated through the economy. Among other things, this depends on the state of the economy at the time the shock hits, the extent of rigidities in the economy, the monetary policy framework and the monetary policy response.”

After considering each of these in turn, Mr Walton reaches several conclusions.

“The size and nature of the shock have been different. Relative to previous episodes, the shock has taken longer to unfold. The economy is also less dependent on oil than during the 1970s. And oil prices have risen as a consequence of strong global demand rather than as a result of supply disruptions associated with wars.”

“The UK economy has been better placed to absorb the current oil price shock. There were few inflationary pressures in the economy when oil prices first began to rise sharply and there has been little sign subsequently of higher wage demands.”

“The monetary policy framework has played an important role. Inflation targeting has helped to anchor inflation expectations, yet it has allowed the MPC to respond flexibly to the oil shock.”

http://www.bankofengland.co.uk/publication...ws/2006/021.htm

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LONDON, Feb 23 (Reuters) - Bank of England policymakers need to look out for any signs that high energy costs are lowering potential economic output, especially as growth has picked up, Monetary Policy Committee member David Walton said on Thursday.

He also said it was impossible to know how large the current energy shock would ultimately be as oil prices have started rising again while the cost of wholesale gas has shot up.

In a speech in London, Walton said that given inflation expectations had been stable, the MPC had been able to respond to the negative effect on demand from high energy prices and cut interest rates last August to 4.5 percent.

"But the Committee also needs to watch carefully for any signs of an adverse impact on supply, particularly now that GDP growth appears to have returned to around its long-run average rate," he said, according to the text of his speech.

"And we do not yet know how large the shock will be ultimately. After dipping during the final months of last year, oil prices have been rising again in recent weeks; wholesale gas prices have also risen sharply."

His comments may further dent expectations the BoE is poised to cut interest rates again. Bets were already scaled back last week when the central bank forecast growth picking up and inflation sticking close its 2 percent target.

Still, Walton said there were substantial risks in both directions to the Bank's inflation forecast.

He said that there was no mechanical formula on how the MPC should respond to higher energy costs but instead policymakers were focussed on how to keep the right balance between supply and demand to keep inflation on target.

He also said that while there had been signs of a pick up in economic activity since the middle of last year, business investment remained weak.

Official data on Thursday showed business investment in the final quarter of 2005 was 1.0 percent lower than in the third quarter and up just 0.3 percent on the same period a year ago.

http://today.reuters.co.uk/investing/finan...RITAIN-BANK.XML

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The Oil Shock will be delayed because people like their cars. They are prepared to sacrifice income to drive them. This leaves them less income to consume, as they pile more spare income into fuel. Then the economy slows, then unemployment rises, THEN we are shagged. This will take time. It's like saying the housing market won't crash because it didn't crash yet, just peaked.

To say we are less dependant on oil than in the seventies is just fantasy.

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Sounds a bit like desperation to me.

Let's see what happens shall we?

said Anthony Santomero, the president of the Philadelphia Federal Reserve Bank

Is this just another US High Street Bank and therefore VI?? Would like to know. Ta

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Sounds a bit like desperation to me.

Let's see what happens shall we?

Is this just another US High Street Bank and therefore VI?? Would like to know. Ta

Part of the FED (Federal Rerve, akin to the BOE in Engalnd), they have state representatives which from time to time comment on various matters.

Maybe the biggest news at the moment is Japan's inevtable tightening, they have another trade deficit problem despite coming out of a decade long recesssion as they are being hit massively by the cost fo importing fuel which is scrubbing out (and more rising exports), strengthening their currency might do the trick.

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The Oil Shock will be delayed because people like their cars. They are prepared to sacrifice income to drive them. This leaves them less income to consume, as they pile more spare income into fuel. Then the economy slows, then unemployment rises, THEN we are shagged. This will take time. It's like saying the housing market won't crash because it didn't crash yet, just peaked.

To say we are less dependant on oil than in the seventies is just fantasy.

We are less dependant on Oil. We don't make anything anymore so that is a lot less plastic. Basically we consume more oil but these oil products are made by foriegn companies.

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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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