Mervyn King plays down the threat of inflation
Mervyn King, the governor of the Bank of England, has this evening played down the threat of inflation in the UK suggesting that inflation is just as likely to under shoot its target as to overshoot. This is the first major speech from Mervyn King since August and would appear to suggest, just prior to the issue of October MPC minutes, that there is some debate within the committee as to the direction of the UK economy.
Mervyn King has many months suggested that UK inflation is not a reliable measure of economic activity and the underlying strength of the UK economy. He has for some time believed that inflation will fall back to within the banks 2% target rate in the short to medium term without any major action from the authorities. Indications that the UK economy is beginning to weaken, after a period of relative buoyancy, would seem to support this belief although so far the figures have refused to fall into place.
The Bank of England is beginning to give the impression of a body which is frustrated by the relative strength of inflation despite numerous attempts to talk down the threat of inflation in the UK.
Retail Sales Collapse In June
Just when many analysts had come to terms with the 3.5% rise in retail sales in May and the fact this did not seem correct, June has seen a fall of 3.9% in sales - the worst fall in 22 years. The move has more than wiped out May's surprise jump and brings the annual growth rate down to 2.2%. So what is happening?
While it would be foolish to sound the alarm bells after one month's...
The Bank of England set to keep rates at 0.5%
The Bank of England monthly meeting for May should be a fairly low-key affair with a suggestion that UK base rates will be maintained at 0.5%. While there are differing groups in the UK looking for a reduction and some looking for an increase in UK base rates it appears that the MPC will be more concerned with quantitative easing in the short to medium term.
The likely decision to m...
Can Inflation Really Get Any Worse?
News that inflation in the UK jumped sharply last month has prompted a wave of fear and concern amongst many of the population but some are finding it difficult to understand how it can rise any further and the long term implications. Can it really get any worse?
The immediate threat is that inflation will rise to in excess of 5% later this year before falling back next year. Howe...
Is the worst yet to come for the UK economy?
With more than 140,000 companies in the UK falling into financial trouble in the final quarter of 2009 there is a stark warning today that the worst of the UK economic downturn may be yet to come. While that is not to say that the UK economy is not starting to recover, the aftermath of what has been the worst economic downturn since the 1920s has still not hit home in many areas of the UK economy....Read More
Did the government abuse its power in the banking sector?
While the banking sector has certainly fought back against the UK government and the various demands which have been made over the last eight months, some still believe this is payback time for the UK government, which is believed to have forced through the Lloyds bank and HBOS merger. Even though there is no hard evidence to suggest this is the case it is rumoured that Gordon Brown himself became...Read More