Inflation hike forecast in 2008
www.moneynews.co.uk > General finance > Inflation hike forecast in 2008
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Money News |
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Inflation hike forecast in 2008
Wed 19th Dec 2007
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Lai Wha Co, principal economist for the Confederation of British Industry, has predicted inflation to reach 2.6 per cent during the third quarter next year, which could persuade the Bank of England (BoE) to decide against reductions in interest rates that some businesses may be hoping for.
The BoE's quarter-point reduction in the base rate to 5.5 per cent this month, which was its first cut since August 2005, is in line with a slowing UK economy, but the bank will also have to be wary of inflation rising markedly above its target rate of two per cent, Ms Co noted.
A downturn in the UK economy will push down on inflation rates, she added, but rising food and commodity prices on an international basis driven by global demand serve to counteract this process.
"It’s just a fine balance between the two: how much offset have you got domestically versus a push up from inflation that’s coming from abroad."
Related News : General finance |
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