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- The rate hikes begin
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With each passing month, the inflation numbers are getting worse. As the numbers deteriorate, the options available to central banks are becoming narrower; either raise rates and take the inevitable hit on growth and financial stability, or let the problem slide and watch inflation slip further. With double-digit inflation hovering on the horizon, some central banks are beginning to act.Does the idea of double-digit inflation sound too alarmist? Last month, the RPI inflation rate was only at 4.3 percent; at least 5 percentage points south of a double-digit rate. Looking at today’s inflation rate is like trying to drive by only looking in the rear view mirror. Inflation is a forward-looking phenomenon, and therefore central banks should look at expectations when formulating policy. In the absence of a credible policy response to rising prices, private sector expectations are adjusting rapidly upwards. …
Original Source: ukhousebubble.blogspot.com
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3 Julio, 2008| housingblogs |
@ 22:19