Just to remind you,the government's target rate is 2%.It is expected that due mainly to external forces of fuel and food prices,it may well be around 3.2% for May.
Watch out for the profits of doom after the announcement at 9.30.
Update 9.40 Inflation at 3.3% for May so letter on the way and prospects for stagflation as the Bank faces the prospect of putting up interest rates during a credit crunch.
Read John Redwood's attempt at forecasting the letter
“Dear Chancellor,
I am writing to report that inflation is now above 3%. This has come about because we held interest rates too low in the period 2004-6, allowing a credit bubble to emerge. The government’s decision to switch target from RPI to CPI made our task more difficult, as the CPI at the time was lower than the RPI, and has since proved to be a very poor indicator of the overall inflation people are experiencing in their daily budgets. Indeed the gap between RPI and CPI has got larger, meaning our failure on inflation as measured by the old target is worse. We felt we had to respknd to lower easier target once set.
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