Wednesday, June 30, 2010
Investment up as the Bank frets about inflation
Posted by David Smith at 11:00 AM
Category: Thoughts and responses

Plenty for economy watchers to get their teeth into today. Business investment staged a strong recovery in the first quarter, rising by 7.8%, though such was the scale of the fall last year that this left investment 7.7% lower than in the first quarter of 2009. Whatever the reason for the delay in the official GDP figures, this was not it. More here. Meanwhile, the Nationwide said house prices rose by a mere 0.1% this month, confirming the flattening trend long predicted here.

An excellent story in The Guardian comfirms the headwinds the economy faces, and the extent to which private sector employment will have to grow to offset the loss of 1.3m public sector related jobs.

Two speeches by Bank of England monetary policy committee members add to the mix. Paul Fisher addressed directly the overshoot in inflation and seems in no hurry to respond to it. Adam Posen, meanwhile, talked of the dilemma between monetary policy that is loose enough to support the tentative recovery but at the same time is allowing an upward creep in inflation. His warnngs of a possible double-dip will get the headlines.