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UK inflation expectations leap to 3.3 pct in May - BoE
inspector_monkfish
Posts: 9,276 Forumite
09:30 11Jun10 UK INFLATION EXPECTATIONS FOR YEAR AHEAD RISE TO 3.3% IN MAY, HIGHEST SINCE AUG 08, VS 2.5% IN FEB
09:30 11Jun10 UK inflation expectations leap to 3.3 pct in May - BoE
LONDON, June 11 - Britons' expectations for inflation over the next 12 months jumped to 3.3 percent in May, the highest level in nearly two years, a quarterly survey from the Bank of England showed on Friday.
That compared with 2.5 percent in February and was the highest since August 2008.
The sharp rise may be worrying to the BoE which wants to ensure that expectations of above-target inflation do not get entrenched, leading to a long-term cycle of price rises and higher wage demands.
Consumer price inflation hit a 17-month high of 3.7 percent last month, almost double the central bank's target. The survey showed the public was not far off the mark, estimating current inflation at 3.6 percent.
The BoE maintains that the recent spike in inflation is due to temporary factors and price pressures will abate later this year when the economy will also be feeling the pain of public spending cuts.
Britain's central bank has kept interest rates at 0.5 percent since March 2009 and has pumped 200 billion pounds into the economy in the form of quantitative easing.
Britain's economy pulled out of recession at the end of 2009 but the recovery remains fragile and most economists do not expect the BoE to start tightening policy until early 2011.
The survey showed some 52 percent of Britons expect interest rates to rise over the next year compared to 6 percent who see a fall.
09:30 11Jun10 UK inflation expectations leap to 3.3 pct in May - BoE
LONDON, June 11 - Britons' expectations for inflation over the next 12 months jumped to 3.3 percent in May, the highest level in nearly two years, a quarterly survey from the Bank of England showed on Friday.
That compared with 2.5 percent in February and was the highest since August 2008.
The sharp rise may be worrying to the BoE which wants to ensure that expectations of above-target inflation do not get entrenched, leading to a long-term cycle of price rises and higher wage demands.
Consumer price inflation hit a 17-month high of 3.7 percent last month, almost double the central bank's target. The survey showed the public was not far off the mark, estimating current inflation at 3.6 percent.
The BoE maintains that the recent spike in inflation is due to temporary factors and price pressures will abate later this year when the economy will also be feeling the pain of public spending cuts.
Britain's central bank has kept interest rates at 0.5 percent since March 2009 and has pumped 200 billion pounds into the economy in the form of quantitative easing.
Britain's economy pulled out of recession at the end of 2009 but the recovery remains fragile and most economists do not expect the BoE to start tightening policy until early 2011.
The survey showed some 52 percent of Britons expect interest rates to rise over the next year compared to 6 percent who see a fall.
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(MSE Andrea says ok!)
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Comments
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Cue a ton of posts essentially saying:
OMG the tories got in rates of 11% minimum here we come!
However, it is a little worrying (especially after some of us posted they don't expect rates of 5% ever again
) to see ongoing inflation rising, with its pace accelerating.
Isn't it?It's getting harder & harder to keep the government in the manner to which they have become accustomed.0 -
what about the 6% of people who expect rates to fall !US housing: it's not a bubble
Moneyweek, December 20050 -
kennyboy66 wrote: »what about the 6% of people who expect rates to fall !
I think Hamish was just winding them upChuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop0 -
It seems that the government wants to inflate the debt away, though in a covert way.
Once the deep cuts come round and unemployment goes back up towards 3 million inflation pressures should stabilise, though interest rates will also need to rise.0 -
chucknorris wrote: »I think Hamish was just winding them up
Hamish, trolling? Never! Methinks you have him confused with another poster;)It seems that the government wants to inflate the debt away, though in a covert way.
Not exactly being carried out covertly (if that is their intention) though is it?It's getting harder & harder to keep the government in the manner to which they have become accustomed.0 -
So much for prudence.0
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I think this is worrying - when inflation expectations become sticky it is not a good sign.0
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i thought that the government inflation figures were irrelevent and not accurate up to a few months ago?
how come now the usual suspects are following RPI and CPI's every movement?0
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