Saturday, 19 February 2011
The Bank of England is both candid and economic with the truth
Mr. King was one of the few leaders in 2008 to be candid about our economic future. He said that standards of living would fall; i.e. wages would not increase as much as prices. However, his recent comments might suggest that he might raise rates to curb inflation. True, but it is a little economic with the truth. The market's assessment through short sterling futures suggest rates at 1.5% by the end of the year. That is hardly enough to deal with CPI above 4% and RPI above 5%. (RPI is conveniently being dropped by government). Both the Government and the Bank want inflation. It is the only palatable way to reduce our debt in real terms. Don't be fooled.