Abstracts » Business

Look to sterling for a rough guide to UK inflation rates

Article Abstract:

The United Kingdom monetary policy committee (MPC) has stated that inflation will be less than the target of 2.5% which the chancellor, Gordon Brown, has set, of pound sterling does not weaken. There will then be further reductions in UK interest rates. Brokers are seeking to forecast UK exchange rates in relation to the Japanese yen, US dollar, and the euro, as well as using signs from the futures market. The currency market could push the value of pound sterling down in the expectation that UK interest rates will fall, but the pound appears likely to remain strong while UK rates are above those of mainland Europe.

Inflation (Finance), Inflation (Economics)

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The old lady's pounding headache

Article Abstract:

United Kingdom inflation has increased to 3%, above the 2.5% target. and this raises concerns about the tightness of economic policy. The drop in value of pound sterling could lead to inflationary pressures which could mean that interest rates may not be reduced later in 1998. The Bank of England had not expected pound sterling to rise by as much as it did in Mar 1998, so the subsequent drop in its value does not necessarily mean interest rates will not fall, unless the drop continues to a significant extent.

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