Tuesday, May 18, 2010

Old fool, proved wrong many times, bumbles when Rome burns…

UK Inflation Hits New High of CPI 3.7%, RPI 5.3%, Mervyn King Writes Another Excuses Letter

''UK Inflation has yet again hit a new high of CPI 3.7% up from last months inflation peak of 3.4%, with RPI rocketing even higher to an eye watering 5.3%, a level not seen since 1991. The academic economists were again taken by surprise. The Bank of England's failure in its primary duty of targeting inflation has prompted the Governor Mervyn King to write another letter to this time the new Chancellor George Osbourne that will again state for the fifth time this year that the rise in inflation above 3% was temporary and not to worry, it should come down, eventually ''

Posted by hpwatcher @ 07:22 PM (1639 views)
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8 thoughts on “Old fool, proved wrong many times, bumbles when Rome burns…

  • I see that last time CPI inflation was this high, interest rates were above 5%.

    Anyone else get the impression the Bank of England is getting increasingly irrational and chancey with the economy? The Bank is warning the rest of the economy about inflation but who’s warning the Bank to watch for runaway inflation?

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  • The Bank is warning the rest of the economy about inflation

    king seems far more obsessed with deflation…..sadly.

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  • Nice Weather We're Having says:

    king seems far more obsessed with deflation…..sadly.

    Debt deflation that is….ironic.

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  • vacuouspolitician says:

    But but folks…”what has Mervyn done that is so wrong”…?

    ReCaptcha – Jar Spoon Spoon Jar

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  • Another day, another ticking time bomb is found. How about a burst of QE, then?

    £ is now $1.4293.

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  • from todays FT:

    Simon Ward of Henderson Global Investors said: “The governor fails to acknowledge the scale of the Bank’s forecasting error.”
    He pointed out that last May, when sterling had already fallen to levels similar to now and the rise in VAT was known, the Bank expected inflation to be 0.7 per cent now. “Higher energy prices can account for only about 0.5 of a percentage point of the 3 point forecast miss,” Mr Ward said.

    Ben Broadbent of Goldman Sachs said the governor “should be a little more careful about how confident he is”.

    http://www.ft.com/cms/s/0/8beb5ebc-6257-11df-991f-00144feab49a.html

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  • vacuouspolitician says:

    @5 The very same people who love Penfold ’cause he’s a dinosaur that they can run rings around…
    Perhaps he has now outlived his use?

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  • landofconfusion says:

    Maybe someone here can explain this to me:

    You buy sovereign debt because it’s safe and because you expect to make at least some profit. But if inflation is shooting over target, why buy? Why is there no bond market crisis? Is Merv trying to let inflation rise until the bond market pips squeak?

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