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Inflation Report Reaction

The February Inflation Report contained no big surprises – as the Bank of England revised up its inflation forecast a little and revised down its near-term growth projection slightly. This combination of changes means that the MPC now judges that the growth-inflation trade-off has worsened somewhat. The expected hawkishness of Governor Mervyn King (following yesterday’s [...]

UK Economic Update

Trade The UK recorded a trade deficit of £9.25bn in December; the largest deficit since records began way back in 1980. This was a result of a 3.5% increase in imports (from November) and only a 1.5% increase in exports. A geographical breakdown shows that the trade deficit with EU countries narrowed by £0.1bn, but [...]

Going for growth!

The US fiscal policy deal will be  more supportive of households’ incomes than most had been expecting, and is likely to push up growth next year. But don’t assume that such a policy shift comes with no risks attached. This past week or two has been an interesting one from the point of view of US policy [...]

German and French differences on EMU: cracks becoming a fissure?

Germany wants to increase the short-term pressure on member states failing to reduce their budget deficits. But France favours “soft laws” and puts a greater emphasis on better-placed states boosting demand.

Cracks in the facade

The establishment of a European Monetary Fund (EMF) would take time, and it would probably be too late to make much of a difference to the key issue facing Europe today – the risk that Greece’s public finance problems percolate through to other markets.

An emulous IMF?

A European Monetary Fund risks being a weak son-of-IMF. But, as worryingly, it appears that only belt-tightening will be permitted. It will not be able to force those with big budget surpluses to rein them in by boosting domestic demand.

Yin yuan

The IMF has said that the yuan is substantially undervalued; a Chinese official has talked of the need to change market expectations.

UK update: Mais points to a way through the maze

George Osborne, the shadow Chancellor, has outlined the changes he would make to UK policy, if elected. The Bank of England would retain its inflation mandate, and a new independent institution would be set up to monitor fiscal policy.

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