Friday, April 8, 2011

The MPC knew this yesterday!

Inflation at UK factories hits two-and-a-half year high

"Inflation at British factories hit its highest rate in more than two years in March, official figures showed, raising fears about the feed-through into the wider economy"." Factory gate prices – what manufacturers charge for their products – rose 5.4pc over the year, the steepest inflation rate since October 2008, said the Office for National Statistics" (wow). "The month-on-month jump was 0.9pc, while economists had expected a 0.6pc leap". The MPC only exist to prop up house prices I think!

Posted by alan @ 06:33 PM (1621 views)
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3 thoughts on “The MPC knew this yesterday!

  • “The MPC knew this yesterday!” – of course they did but they they have bigger fish to fry (please see below and no it’s not from the daily mash it’s from a professional publication)

    “Mervyn King’s new microwave”

    Bank of England governor Mervyn King has taken time out from contemplating the finer points of monetary policy to memo employees promising a raft of improvements in working conditions.

    According to Bloomberg, the memo covers everything from new policies on annual leave to offering dry-cleaning services. King even promised an acceleration in the upgrade of the Bank’s toilets at its London HQ. The current state of those facilities is, perhaps wisely, not mentioned.

    There’s no denying the central focus of the letter, however: food. A smorgasbord of proposals leaves no choice uncatered for: the Bank will provide more refrigerators and microwaves for workers, provide more comfortable seating in its cafe and, most importantly, hold down canteen food prices.

    So though he may not be able to control food price inflation for the rest of the country, King is at least helping out at home.

    The moves are in part due to King’s earlier imposition of a two-year freeze on pay at the Bank, in line with that seen in the public sector, in what proved to be early evidence of the fact that UK inflation wouldn’t turn out to be of the demand-pull variety.

    “We continue to face challenging times and these challenges will create more opportunities for staff going forwards. I look forward to sharing this journey with you all,” King reportedly said in the memo.

    It seems unlikely that these measures will stop the Bank’s employees from being tempted away by roles in a financial services industry that is still able to offer not only uncapped salaries but also, in all probability, an altogether better standard of fridges and microwaves.

    Perhaps King thinks the solution to staff retention may not lie in improved working conditions at the BoE but rather in the shape of another policy he has been advocating since the financial crisis: a radical overhaul of the banking sector.

    The Independent Commission on Banking releases its preliminary report on the industry on Monday, expected to be a “bold document”, in the words of Deutsche Bank analysts, that recommends some form of split between retail and investment banking divisions.

    Whether the government heeds such recommendations is a different matter altogether. The report may at least provide some official backing for King, who said last month that failing to reform the banking sector could lead to another financial crisis.

    But faced with difficult decisions of his own on interest rates and inflation, the governor is unlikely to be sitting comfortably in the near future – no matter what the extent of the Bank’s new furniture arrangements.


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  • it’s ok, the BoE has an index linked pension

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  • Jack C,
    as for “bigger fish to fry”, I thought the BoE is tasked with managing inflation. As for splitting banks/ institutions….

    Lehmans and Northern Rock both fell over. Lehman Bros had no retail side and NR had no investment banking. As for HSBC, it survived OK and has both!

    Sorry that Mervyn is sitting uncomfortably but he did apply for the role!

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