High inflation in Britain is a temporary phenomenon, says Mervyn King in a letter to Alistair Darling to explain the current annual CPI rate of 3.5 per cent.
Three short-run factors have driven up the current rate, he says: (1) the restoration of VAT to 17.5 per cent; (2) oil prices rising by about 70 per cent over the past year; and (3) the fall of the pound in 2007-8 is feeding through to consumer prices. Read more
The central bank of Sri Lanka has held the repo rate at 7.5 per cent, as the economy shows signs of returning health. Rates offered by banks to the public – averaging about 15 per cent in December – are beginning to fall, and credit became more available (in nominal terms) at the end of last year. Inflation is interesting: year-on-year inflation rose steeply from 4.8 at the end of 2009 to 6.5 per cent in January, but the annual average inflation fell to 3.1 per cent. Annual average inflation – slower to change and less affected by what happened this month last year – has fallen from 21.6 per cent this time last year, a remarkable achievement. Read more
Portuguese central banker Vitor Manuel Ribeiro Constancio has been chosen by a “unanimous” and “quick” vote of finance ministers from the 16 eurozone countries. Mr Constancio will replace Lucas Papademos when his eight-year term ends on May 31. Luxembourg’s Yves Mersch and Belgium’s Peter Praet had also been on the ballot for the vice presidency.
Mr Constancio’s reputation as a “dove”, who pays more attention to economic growth than some of his ECB colleagues, increases the likelihood that Axel Weber, an anti-inflation “hawk”, will be chosen to replace ECB President Jean-Claude Trichet when his term ends on October 31, 2011. Had ministers picked Mr Mersch, a tough inflation fighter, the chances of Italy’s Mario Draghi replacing Mr Trichet would have risen (from Bloomberg) Read more
| About this blog | Blog guide |
Chris Giles has been the economics editor of the Financial Times since 2004. Based in London, he writes about international economic trends and the British economy. Before reporting economics for the Financial Times, he wrote editorials for the paper, reported for the BBC, worked as a regulator of the broadcasting industry and undertook research for the Institute for Fiscal Studies. RSS
Michael Steen, Frankfurt bureau chief, covers the ECB and the eurozone's economies. He joined the Financial Times in 2007 as Amsterdam correspondent and later worked as a front page news editor in London. Before joining the FT, he spent nine years as a correspondent at Reuters, mostly in foreign postings that included a previous stint in Frankfurt, as well as Moscow, Kiev and central Asia. He read German and Russian at Cambridge.RSS
Robin Harding is the FT's US economics editor, based in Washington. Prior to this, he was based in Tokyo, covering the Bank of Japan and Japan's technology sector, and in London as an economics leader writer. Robin studied economics at Cambridge and has a masters in economics from Hitotsubashi University, where he was a Monbusho scholar. Before joining the FT, Robin worked in asset management and banking. RSS
Ralph Atkins, capital markets editor, has been writing for the Financial Times for more than 20 years following an economics degree from Cambridge. From 2004 to 2012, Ralph was Frankfurt bureau chief, watching the European Central Bank and eurozone economies. He has also worked in Bonn, Berlin, Jerusalem and Brussels. RSS
Claire Jones is Money Supply economics team writer, based in London. Before joining the Financial Times, she was the editor of the Central Banking journal and CentralBanking.com. Claire studied philosophy and economics at the London School of Economics. RSS
