Friday, April 18, 2008
Walking the tightrope
Posted by David Smith at 10:00 AM
Category: Thoughts and responses

A very good speech by Charlie Bean, the Bank's chief economist, which is worth reading in detail. Among the nuggets - he does not see any early easing of upward pressure on oil and commodity prices, which means inflation is likely to exceed 3% and Mervyn King will have to write another letter. He is sticking to his view that house prices can fall further without damaging consumer spending. Only 5% of people with mortgages have less than 20% of equity in their homes, he says, which suggests negative equity isn't looming quite as large as some of today's reports imply. The speech is here.