The high price of scribophobia
Article Abstract:
United Kingdom interest rates are forecast to rise in 2000, if short-sterling contracts can be taken as a guide, yet rates could be cut in Jun 1999. The Monetary Policy Committee (MPC) decides interest rates, which are not meant to be predictable. Interest rates affect inflation after a time lag of some two years, so interest rates should be set according to forecasts for inflation in two years' time. Expectations of rate changes affect the decisions of companies and financial markets, which leads to more volatile business cycles. The MPC may move gradually and fear reversals due to the poor quality of economic data and fear of losing credibility through a policy reversal, which makes interest rate changes easier to predict.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1999
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Don't discount a sterling slither
Article Abstract:
The UK government has raised interest rates which will affect industry by increasing the cost of borrowing. The Bank of England has expressed a relaxed view on the dangers of inflation and the interest rate rise of Feb 1995 was a preventive measure. Pound sterling has responded weakly to this rise in interest rates and the pound could also be affected by a worsening capital account in 1995. Financial markets know that the UK government is concerned to win the next election, and that only exchange rate pressures are likely to lead to a further rise in interest rates.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1995
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Acid test of the Bank's freedom
Article Abstract:
The Bank of England began raising UK interest rates earlier than was normal in previous cycles, during 1994. The Bank is concerned that inflation could rise in the UK in the two years from 1995, especially since the labor market appears to be tightening. There could be conflict between the Bank of England and the UK chancellor since the UK government wishes to continue economic growth prior to an election.Such a conflict would reveal the extent to which the Bank of England has autonomy.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1995
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