Q4 GDP data show that the recovery s choppy but CPI is uncomfortably high and of a more immediate concern
Return to economic stability will need carefully well-judged steps looking beyond the next few months
Central banks do not judge policy based on the latest headlines
At some points rates will have to return to more normal level
Higher expectations alone no CPI danger without money and consumption growth
Wage hikes as a result of higher commodity prices would require MPC policy action
Central bank credibility not won or lost in a year
BOE has not abandoned its inflation target ( they just put it in storage for a few years…
)
His comments are sort of all over the shop… They are more hawkish than normal but also shockingly incoherent.
Central bankers have been telling us for years it is not CPI that they are worried about but inflation expectations that are their major concern. He turns that formula on its head, cutting into the BOE’s dwindling credibility…
Cable jumped from 1.5790 to 1.5830 on the headlines and now trades at 1.5785…having fun yet?
