Inflation falls to 2.8% in May

gagahouse

Kennyboy66 wrote: »

I thought that all the borrowing figures were net of financial interventions - such as QE

All that interest the the government pays to the BoE held gilts will come in necessary when QE is eventually un-wound and BoE suffers losses.

IIRC the BOE is idemnified from any losses by the Treasury.

MrRee_2

People get to keep even MORE of their money!

REJOICE all ..... low interest rates, low inflation, low mortgage costs, low house prices, it doesn't get much better than this folks!!

DiggerUK

The_J wrote: »

...... We have a fiat currency, inflation is inevitable..... This doesn't just suggest that QE is likely, it suggests it is necessary.

Inflation with a fiat currency is only inevitable, if the state prints beyond our means to dig them and their chums out of trouble.

To say that QE is necessary, begs the question..for who. All that will happen is that inflation will get even more difficult to contain. More importantly, it will get more difficult to keep under any form of control.

It seems you view inflation and printy printy, as a victimless crime.
..._

lvader

Without QE we would have deflation so the fact that we still have lowish inflation points to QE being quite well balanced. It also helps keep government borrowing costs at record lows.

commodity prices incl. the shiny stuff continue to drop pointing at inflation going down further. Oil hit a 17 month low today.

EchoLocation

Masomnia wrote: »

This means inflation is on target, doesn't it?

If you have a target for long enough eventually the price rises will start to ease and it'll get there. Too bad it's been over target for far too long, with the BOE not only doing nothing to address it, but actively pursuing an inflation policy with QE. Still, we'll likely get to 2% at some point and the media will be falling over themselves to tell us that the BOE knows what it's doing as it's hit it's target... conveniently forgetting all that time running at double the target and all those locked in price rises.

lvader

The BoE has very little control of inflation, this is especially true when the causes are increased taxation and global commodity prices. Higher interest rates can sometimes help, but increasing them while the country is in recession in generally regarded as a very bad idea. Lucky for us we don't have a bunch of morons running the BoE, because it would have been very easy to use the inflation target as an excuse for killing any chances of recovery.

EchoLocation

lvader wrote: »

The BoE has very little control of inflation, this is especially true when the causes are increased taxation and global commodity prices. Higher interest rates can sometimes help, but increasing them while the country is in recession in generally regarded as a very bad idea. Lucky for us we don't have a bunch of morons running the BoE, because it would have been very easy to use the inflation target as an excuse for killing any chances of recovery.

Is it not actually their remit to control inflation?

No we're positively leading the world in recovery aren't we? Ignoring inflation and screwing savers by keeping interest rates at historic lows to look after the banks/property market has not done us any favours at all.

lvader

EchoLocation wrote: »

Is it not actually their remit to control inflation?

They are also required to act to support growth and employment.

Since the reasons for the inflation were mostly out of their control, the second remit takes on further significance.