Comments: 2.7% and no letter

"Comfortable" - with the inverted commas being highly significant! 2.7% is still way way above the Bank's target and they certainly should not be applauded for letting inflation get so high in the first place. Especially when you look at real inflation, rather than the fiddled Chav Price Index.

Posted by Burt Harbinson at February 13, 2007 02:43 PM

If we can believe the Governor that "inflation will fall significantly in the second half of the year" CPI inflation will soon be very close to the governments target. Although the divergence between CPI and RPI is quite marked. I feel the RPI would be a better, as a measure of the cost of living, which is the whole point of measuring inflation.

Posted by R.Pettinger at February 14, 2007 03:15 PM

If we can believe the Governor that "inflation will fall significantly in the second half of the year" CPI inflation will soon be very close to the governments target. Although the divergence between CPI and RPI is quite marked. I feel the RPI would be a better, as a measure of the cost of living, which is the whole point of measuring inflation.

Posted by R.Pettinger at February 14, 2007 03:24 PM

Dear David,

I believe that there is that portion in the value of the pound which can be attributed to overzealousness of the marketeers.Or it can be simply that the pound overshadows other currencies because of the bullishness of the funds/traders.

I have also noticed that the last two rises in interest rates have failed to move the pound to distinctive increases in the value of the pound against the dollar.

Therefore any decreases in fuel prices and other CPI components will not have any impact on inflation as the pound may fall whilst
interest rates continue to increase.It is imperative that the Governors forecast of lower inflation in the second half of the year may be offset by the decreasing value of the pound.

Posted by Hitesh Damani at February 16, 2007 12:21 PM

Not sure I entirely get your drift, but if you're worried that the pound is suddenly going to fall and push up inflation, that would go against the record of the past ten and a half years, when sterling has been remarkably stable.

Posted by David Smith at February 16, 2007 04:33 PM