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AtW
17th April 2012, 12:51
The official rate of annual inflation on the Consumer Prices Index rose to 3.5pc last month from 3.4pc in February according to Office for National Statistics data.

It was the first rise in six months after inflation peaked at 5.2pc in September 2011. Economists had forecast no change from 3.4pc.

The Bank of England and Government had been hoping that inflation would keep falling this year, easing the financial burden on British households and businesses.

The Bank has repeatedly insisted that inflation would fall sharply in the early part of this year and be below the 2pc target by the end of the year.

Sir Mervyn King, the Bank’s governor, is now likely to have to write yet another letter to the Chancellor in May, explaining why inflation is more than one percentage point above the target.

The March rise will be an embarrassment to the Bank’s Monetary Policy Committee, which is expected to actively consider boosting its £325bn quantitative easing programme at its May policy meeting.

Stubbornly high inflation make further bond purchases through QE less likely, given the programme's potential to further fuel inflation.

Source: UK inflation posts unexpected rise in March - Telegraph (http://www.telegraph.co.uk/finance/economics/9208510/UK-inflation-posts-unexpected-rise-in-March.html)

Blame this man -

http://i.telegraph.co.uk/multimedia/archive/02057/Merv_2057819b.jpg

BrilloPad
17th April 2012, 13:52
+1

Merv has consistently underestimated inflation. And once QE starts to seep into the economy it will get worse.

AtW
17th April 2012, 13:54
Merv has consistently underestimated inflation.

No, he didn't.

To say that he did would mean he is an idiot as well as the rest of the monetary policy committee.

They are not idiots.

BrilloPad
17th April 2012, 14:00
No, he didn't.

To say that he did would mean he is an idiot as well as the rest of the monetary policy committee.

They are not idiots.

How well have they done at keeping inflation between 1% and 3%?

I would have done a better job.

Andy2
17th April 2012, 15:07
Now this will properly fuel the inflation

Pound Strength Is (http://www.bloomberg.com/news/2012-04-12/pound-strength-is-crippling-britain-s-recovery-civitas-says.html)

AtW
17th April 2012, 15:16
How well have they done at keeping inflation between 1% and 3%?


Badly, but that's not because they are idiots - they are very smart people who know exactly what they do but they've used all their experience and authority to keep rates down and print money whilst completely disregarding their main objective - keep inflation within the range.

d000hg
17th April 2012, 15:27
+1

Merv has consistently underestimated inflation.I wonder, is this one of those things where saying "it's bad" makes it worse, and therefore you always have to officially 'expect' an optimistic outcome?

AtW
17th April 2012, 16:12
Supreme Chancellor: It's treason, then...

centurian
17th April 2012, 16:51
Badly, but that's not because they are idiots - they are very smart people who know exactly what they do but they've used all their experience and authority to keep rates down and print money whilst completely disregarding their main objective - keep inflation within the range.

WAtWS

He knew exactly what would happen - just wasn't prepared to admit it

It's easier to seek forgiveness than permission...

BrilloPad
17th April 2012, 16:52
Why can't they just admit that the real inflation target is as high as possible to inflate the debt away?

AtW
17th April 2012, 16:58
Why can't they just admit that the real inflation target is as high as possible to inflate the debt away?

Public sector and pensions would require more money to compensate for real inflation ...

OwlHoot
17th April 2012, 17:00
Interesting that the Beeb chose to air a program on the '70s this week.

Are we being softened up for an anticipated rerun of the inflation / industrial unrest cycle of those days? :eyes

BrilloPad
17th April 2012, 17:01
Public sector and pensions would require more money to compensate for real inflation ...

Which can be printed. The big losers from inflation are savers.

TimberWolf
17th April 2012, 17:02
Aren't they getting away with it because they don't have to worry to much about annoying creditors, because these are either savers, pensioners, future generations or the government itself courtesy of the printing press.

BrilloPad
17th April 2012, 17:07
Article in Telegraph here Why you can't inflate away the eurozone's troubles – Telegraph Blogs (http://blogs.telegraph.co.uk/finance/matspersson/100016251/why-you-cant-inflate-away-the-eurozones-troubles/)

But it is totally false. What caused WW2 was not deflation. It was Versailles treaty and the USA calling in loans following the wall street crash ( Weimar Republic and the Great Depression (http://www.historylearningsite.co.uk/weimar_depression_1929.htm) ).

I am still trying work out what the downside of inflation is. Unless you are a saver it is not clear. To me anyway.

TimberWolf
17th April 2012, 20:11
I don't understand how banks are making money on 1.5% interest mortgages when inflation is 10%, or whatever the real non-ipod-fiddled inflation rate is.

Old Greg
17th April 2012, 20:29
Why can't they just admit that the real inflation target is as high as possible to inflate the debt away?

Quite right too.

Gonzo
18th April 2012, 05:41
Badly, but that's not because they are idiots - they are very smart people who know exactly what they do but they've used all their experience and authority to keep rates down and print money whilst completely disregarding their main objective - keep inflation within the range.Their public main objective. Their real objective was different I think.

Still, it was good while it lasted. :rolleyes:

BrilloPad
18th April 2012, 05:45
I don't understand how banks are making money on 1.5% interest mortgages when inflation is 10%, or whatever the real non-ipod-fiddled inflation rate is.

Aren't they borrowing the money from the BoE at 0.5%? :confused:

BigTime
18th April 2012, 17:18
See the news tonight?

Looks like BoE finally moved on from just a blip to expect inflation to remain high.

BrilloPad
18th April 2012, 17:31
See the news tonight?

Looks like BoE finally moved on from just a blip to expect inflation to remain high.

I bet it don't stop them printing money.

BigTime
18th April 2012, 17:38
I bet it don't stop them printing money.

Aye. We've pulled the avoiding deflation one too many times and it's obvious we need to keep printing to survive so let's crack on.

OwlHoot
21st April 2012, 09:06
I am still trying work out what the downside of inflation is. Unless you are a saver it is not clear. To me anyway.

If we're talking about deliberate inflation, contrived to stimulate the economy, I suppose one downside is that it tends to stay around and worsen once it has done its job.

A bit like lighting a fire to stay warm in a woodchip warehouse, or like Romano-Britons hiring Saxon mercenaries to fight each other in the 400s - Before they knew it the Saxons were taking over.