Thursday, 7 August 2008

The MPC holds rates

No rate increase this month. It is disappointing but not surprising. I haven't seen the statement yet, but I am sure we will see a liberal use of such words as "balancing, monitoring and weighing".

Inflation escapes for at least one more month. However, it is not getting any easier for the MPC. The economy is slowing but its impact on inflation has, so far, been negligible. Meanwhile, price expectations are rising.

Only a rate hike will calm things down.


British Banker said...

Alice, you're wrong on rates. Give it a few months and the UK will be in the depths of a Japanese style depression.

ullrakesh said...

Au contraire British Banker, if you fail to deal with inflation and try to stimulate your economy first, all you'll end up doing is stimulating inflation.

The very idea that the falling economy will collapse inflation flies in the face of history, the rising prices in the shops and fails to take account of the inflationary spiral caused by higher wage demands and the resulting higher input costs.