Thursday, 11 September 2008

Inflation expectations rising

The Bank of England has just published its semi-annual survey of inflation expectations. When asked to give the current rate of inflation, respondents gave a median answer of 5.4 percent, a series high. The number picked up significantly since the last survey, which took place in May. Then, respondents gave a median answer of 4.9 percent.

Looking forward, people are anticipating continued high inflation.When asked about inflation next year, median expectations were 4.4 percent; again, a series high.

The message to the MPC is clear; cut interest rates at your peril. Inflationary expectations are picking up and any loosening of monetary policy threatens to destabilise expectations further.

1 comment:

Anonymous said...

No surprises here.