Bank Of England Minutes Show Inflation May Be The Main Threat
While there are still some analysts in the stock market who are looking for a reduction in UK base rates, the minutes from the Bank of England meeting earlier this month showed a definite barrier to immediate base rate reductions. The vote was eight against one, but there does seem to be some conflicting views about the threat of inflation.
In reality the markets have written off any interest rate changes in the short term, but there are growing concerns that inflation may comeback to haunt the UK markets. The ever increasing price of oil has already led to a number of price rise in the economy and with little chance of a substantial fall in the oil price in the short term, there seems to be more pressure on the upside.
However, there seems to be a growing belief that the falling housing market may well keep inflation under control, severely denting the amount of money the consumer has to spend in the market place. There are even some so called “doves†at the Bank of England who believe that interest rates may actually fall further in August.
As we have mentioned on a number of occasions of late, the UK economy is proving very difficult to read at the moment, making forecasting near impossible.
Share this..
Related stories
UK unions want rail network back under government control
In what is fast becoming a government v union battle of wills, it has been revealed that the unions want the UK government to maintain control of the former National Express rail franchise, the East Coast main line.
This is the rail franchise which National Express effectively gave back to the government because of increased losses and the impact it was having on the company's balan...
US government looking for financial overhaul
President Obama will today urge the US Congress to approve a mass of changes to the US financial system just one year to the day since the collapse of Lehman Bros. This is a very poignant moment for the US financial markets because the collapse of Lehman Bros ultimately compounded the collapse of the worldwide financial system. The fact that president Obama is looking to use this anniversary to pu...
Read MoreUK retail sales rise 1.6% over Christmas period
While the headline figure with a 1.6% rise in retail sales over the Christmas period would normally make good reading for analysts and investors everything is not as it seems. Despite the rising figures, there was a 0.8% fall in the value of sales suggesting that steep reductions and excessive promotions have taken the wind out of the sails of the UK retail market.
As we have writte...
UK quantitative easing policy criticised
In a surprise attack by a supposed ally in Europe, Gordon Brown felt the full wrath of German Chancellor Angela Merkel today after she heavily criticised the U.K.'s policy of quantitative easing. Despite the fact that the European Central Bank is also executing such a policy at this moment in time Ms Merkel felt the UK was a valid target for her differing opinion.
While the full ben...
OFT to look again at UK beer industry
The Office of Fair Trading (OFT) has today confirmed it will reopen an enquiry into the tenanted pub market after legal threats from Camra (the Campaign for Real Ale). The original enquiry was launched back in the summer of 2009 after which the OFT ruled there was no evidence that supply ties were having any impact upon the competitiveness and pricing in the UK pub market. However, Camra immediate...
Read More