Strong pound might not have lasting effect on inflation — BoE’s Forbes

Haldane, one of nine policymakers who vote on interest rates at the Bank, reiterated warnings he made earlier this year that the United Kingdom economy was not ready for higher borrowing costs.


Bank Governor Mark Carney said at the end of August the recovery in Britain’s economy “will likely put the decision as to when to start the process of gradual monetary policy normalisation into sharper relief around the turn of this year”. The Fed’s decision making has been a market mover in the USA as investors batten down the hatches for further volatility in share markets.

Ten consecutive quarters of growth has left unemployment in Britain at its lowest for seven years, with only the U.S. and Japan boasting lower rates among Group of Seven countries.

The pay boost adds to signs that workers are racking up greater bargaining power, as surveys depict companies increasingly struggling to find good candidates to fill job openings.

British earnings, excluding bonuses, grew at their fastest rate in more than six years in the three months to July, official data showed on Wednesday.

Sam Hill, an economist at RBC, said there were some other less encouraging details in the figures, including a small fall in full-time employment while part-time employment rose.

“Whether a variant of this technology could support central bank-issued digital currency is very much an open question”.

“With increased globalization, it means the conditions facing the USA economy are likely to be similar to the ones facing the United Kingdom “, said George Buckley, an economist at Deutsche Bank in London.

The Office for National Statistics said the unemployment rate held steady from the February-April period at 5.5 percent, matching a record low since before the financial crisis.

“Perhaps most important for monetary policy today, this approach also suggests that sterling’s recent appreciation could create less drag on import prices and inflation than we might have expected if the levels of pass-through seen after the crisis persisted”, Forbes said. Federal funds futures are now showing a less than 50 percent chance that the central bank will raise rates in 2015.

David Miles- whose term on the MPC ended last month – refuted the idea that the BOE has to wait until the Fed increases rates to do so itself. The pound recovered ground along with the dollar against the euro in afternoon trade to stand half a percent higher.


In addition, headline United Kingdom consumer price inflation is still close to zero and “Even after stripping out food and energy prices… the Bank’s range of core inflation measures average around 1%” leading Andy to state that he is not as confident as he would like “that one percentage point of additional nominal pick-up will be forthcoming over the next two years“.

A Federal Reserve police officer keeps watch while posted outside the Federal Reserve headquarters in Washingt