Thursday, June 26, 2008

Mervyn King briefing to Treasury Select Committee (TSC)

King confident on inflation fall

The governor of the Bank of England, Mervyn King, has told MPs he is confident that inflation will fall back to the government's 2% target. But an economic slowdown was needed to ensure inflation returned to the goal in the next year or so, Mr King said. He warned rising food and energy prices may push inflation above 4% this year. His Treasury Select Committee appearance comes a week after he wrote to the chancellor, explaining why inflation had hit 3.3%.

Posted by jack c @ 10:42 AM (1043 views)
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9 thoughts on “Mervyn King briefing to Treasury Select Committee (TSC)

  • waitingfor hpc says:

    what a load of b*ll s**t. he know that inflation is being pushed by the Fed, and they seem very happy with it!

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  • He is pre-empting the inclusion of house prices into the calculation of inflation.

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  • matt_the_hat says:

    Can someone please educate me a little further on matters regarding inflation.

    I thought the point of setting inflation targets were that something that was “worth” say 1.00 squid today you would have to spend say 1*(1.02)^10 = 1.22 on in 10 yrs (@ 2% inflation).

    But in the current climate over a 10 yr period – say the government make the target for an optimistic 5 yrs and overshoot by 1% the other 5 then inflation would be 1*(1.02)^5*(1.03)^5 = 1.28. 1.28:1.22 might no seem like a big deal but to a saver that is the difference between money holding or losing value in a bank.

    Therefore don’t they need to correct for the overshoot years???? Or can we just get it all out of the way in one year say 10%, then meet our “target”. All seems a bit absurd to me.

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  • he is waiting for the fudged figures

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  • Some Tory members of the Select Committtee were giving stick to King about rising inflation – it is probably all MPs are hearing of the angry voters – one telling him pretty aggressively that he was paid to keep inflation at 2 per cent. If the BBC etc show that clip it helps creates a climate whereby it is difficult for them to do a FED and lower rates…

    I also wonder if King is prepared to further sacrifice his reputation to bail out a PM who is clearly on the way out..Brown might desperately want a rate cutter but suspect King has more than one eye on how history is going to judge him as Governor which suggests he is going to dissappoint all the VIs screaming for a looser policy ..

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  • george monsoon says:

    Is there anyone in here naive enough to believe the governent issued inflation figures as fact?

    I can’t see inflation being anything below 20% p.a.

    This is b*ll*cks of the highest order..

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  • Matt the hat – very good point. Bringing inflation down to the target does not compensate for that period where it was above target. My savings have already been stolen.

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  • george monsoon says:

    sometimes I feel like the guy at the back of the hall with his hand up all night but never gets a look in.

    come on.. this has to be a hot topic.. 20% inflation, do you agree or not. IF not, justufy your argument with some hard evidence.

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  • landofconfusion says:

    Monetary supply growth is normally a good indicator of inflation but based on what I buy (and excluding fuel costs) my personal inflation is in the region of about 12%.

    That said, I tend to buy bulk when things I use are on offer and this obviously has an impact.

    And then there’s this post from the blog:

    http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/13/cmcostofliving113.xml

    (Posted by last_days_of_disco @ 09:09 PM Friday, June 13, 2008)

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