Inflation Rate News...
Inflation rate news
Inflation rate news: Inflation hits 3.3%: Changes ahead at the Bank
June 19th 2008.
Last night, The Chancellor at The Mansion House dinner, hosted by The Lord Mayor of London, signalled changes ahead at The Bank of England.
This last month inflation hit 3.3% that's 1.3% over target and with interest rates on hold at 5% earlier this month, there's nothing that the Monetary Policy Committee can do about this apart from increase rates which as has been written earlier, would do more harm to the UK in terms of decreasing demand and increasing pain to the voting public.
So the Chancellor has announced that there are to be changes ahead at the Bank, making it responsible for financial stability, rather than just inflation and monetary policy. Of course inflation is still a huge part of what'll be required of their function but, they will now be responsible for the greater financial good. This is to be brought about in a Banking Bill later this year. There's evidence that moves are under way to clear the decks and reorganise with the impending departure of Sir John Gieve, a Deputy Governor of the Bank of England who's leaving to give way to other figures who will be able to see through a 5 year term.
Interestingly, The Chancellor reported that of last month's inflation, 1.2% of (of the 3.3% Inflation figure)the increase was from increased energy and food costs which as we know have shot up. It is expected that these increases will fall back in the near future, however to combat the increase in inflation
interest rates may have to rise in the future.
Key facts: Global inflation stats over the last year:
* Agricultural prices have increased by 40 per cent.
* Oil has risen by 80% to av $123 per barrel - (10 years ago it cost $10)
* Euro inflation is running at 3.7%
* US inflation is running at 4.2%
* UK inflation since 2000 has been the second lowest of the G7.
Inflation rate news: Inflation hits 3%
May 17th 2008.
Inflation has hit 3% and is set to rise further, leaving little room for the Bank of England's MPC to cut rates. The MPC's goal is to target inflation at 2%.
Professor Peter Spencer from the renowned Item Club aka the 'Shadow MPC' has warned that interest rates would have to stay at 5% if inflation is to be brought down to 2%. He has urged the chancellor to 'have a very good look at the specification of monetary policy'.
Professor Spencer has said 'The consumer will have to be crucified in order to meet the inflation target as it stands at the moment'. He has called for the Bank of England's remit to change so it focused on "core inflation", a measure that excludes food and energy prices and is used in the US.
Leaving rates where they are now for the foreseeable future would further squeeze household incomes and force companies to cut jobs - the implication being that growth would get to near zero or even go into recession.
Mervyn King, The governor of the Bank of England, warned recently that "the balance of risks to the outlook for growth is to the downside in the medium term". In other words, the MPC's job is to mind inflation and that needs to be brought down under control, which inevitably will lead to pain in the economy over all. Stand by...
* Unemployment rises by 14,000 this month.
* Second negative month for sales.
* Mortgage lending hits a 33 year low.
* Firms 'up prices as costs soar'.
Inflation Rate News...
The Bank of England has forecasted in it's latest quarterly report that the economy will slow to 2.2% in 2008, that inflation would accelerate, owing to higher energy prices and that even if interest rates were to fall by half a percent, it would still hit it's inflation targets. A series of interest rate cuts are expected.
On this news the Pound fell fell to a four year low against the Euro and Dollar
Uncertainty abounds over the outlook for the economy: surging energy and food prices; the impacts of the credit crunch, softening in house prices and falling consumer demand were all factors to take into account. A stock market fall has been factored into projections.
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