Tuesday, December 18, 2007
Inflation steady, Treasury bumps up Rock guarantee
Posted by David Smith at 05:00 PM
Category: Thoughts and responses

The inflation figures were good, CPI inflation holding steady at 2.1%, despite a surge in petrol prices. Both RPI measures ticked up slightly, RPIX from 3.1% to 3.2% and headline RPI from 4.2% to 4.3%. But the figures were a lot better than they might have been. Details here.

More significant, perhaps, the Treasury extended its guarantee to Northern Rock "at the request of Northern Rock plc, to ... unsubordinated wholesale obligations, whether now existing or arising in the future". The taxpayers' interest in a successful resolution to this affair has just increased. This is the Treasury's statement.

Meanwhile, the Bank conducted its first operation to supply additional liquidity, while Mervyn King hinted that nationalisation is now running ahead of a private sale as the most likely outcome. This is his opening statement to the Treasury committee.

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