UK: too loose
Article Abstract:
UK economic growth looks set to rise, according to Lehman Brothers. Disposable income is rising and this is boosting consumer spending which in turn pushes up economic growth. House prices are rising and there has been a drop in unemployment which will encourage consumers to spend. Average earnings are increasing and this means that inflation could rise. The government may seek to reduce interest rates despite advice to the contrary from the Bank of England, and this may be combined with tax cuts which will hit pound sterling and bonds.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1996
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Growth vs prudence
Article Abstract:
The UK government is concerned about inflation rates in early 1995. Consumer confidence is low, but rises in interest rates are necessary to control inflation. The headline rate increased to 3.3% from 2.9% in Jan 1995, though the underlying rate was 2. 8% compared with 2.5%, since this excludes mortgage payments. Pound sterling is also weak, and this could put pressure on inflation through increasing the cost of imports. This means that the government is under more pressure to raise interest rates.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1995
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The problem of policy credibility as style
Article Abstract:
The UK government's inflation expectations of 2.5% or under are not believed by the market, as is shown by the difference in yields for index-linked and conventional government securities (gilts). Central banks can underestimate the non-inflationary level of unemployment, which can accidentally trigger inflation. Interest rate changes can take some two years to have an impact, and inflation can be self-perpetuating. Commodity price changes and other price shocks can also trigger inflation.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1996
User Contributions:
Comment about this article or add new information about this topic:
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