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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.

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