domestic inflation

Chris Giles

The question seems absurd. John Rentoul of the Sunday Independent would be tempted to add it immediately to his list of journalistic questions to which the answer is “no”. I think the answer is obviously “no”.

But the Treasury and the Information Commissioner believe anyone revealing details of the Bank of England’s forecasts is doing something that is:

“likely to have a destabilising effect on the financial markets and thus have a prejudicial effect on the economic interests of all or part of the UK”.

Hence, in the eyes of government, Mr Carney, who revealed details of the BoE forecasts on Wednesday, is something of a traitor. At least that was the view of the Treasury last year. Read more

Imported inflation from emerging markets is a short-run factor which the Bank will take into account, Mervyn King has said at today’s release of the quarterly inflation report. “In the very long-run, however, inflation is not determined beyond these shores but domestically.”

This is a surprising statement, and one at odds with some of his European peers, at the very least. Lorenzo Bini Smaghi, ECB executive board member, recently warned of a sea change in inflation dynamics. “Unlike the last decade,” he said, “the process of reducing the prices of manufactured goods imported from developing countries seems to have ended, particularly in respect of products imported from China.” Read more