Oil prices down – you read it here first!
House prices down.
Commercial property prices down.
New borrowing for everyone down.
People’s spending squeezed.
How can the Bank think this is the background to higher inflation in a year or so?
Overall price increases are still a bit above target – that’s because the Bank and the MPC got it wrong a couple of years ago, keeping interest rates too low for too long. It is also because the government owned or influenced monopolies like railway fares, Council tax and fuel tax have gone up.
Yesterday sterling fell and the UK Stock market rose sharply. Markets are clearly expecting an interest rate cut today.
Whether the Bank does or does not cut rates, expectations of more cuts will build up in the days ahead, as no-one in the markets thinks the Bank can remain unconcerned about what is going on in the banking sector for much longer. Today’s problems for the banks are tomorrow’s problems for everyone else, as money makes the economy go round and banks supply the money.