Contrasting trends

Article Abstract:

A survey of inflation forecasts for the United Kingdom taken in Jun 1997 shows the impact of conflicting factors on inflation since Mar 1997. On the one hand, comsumer demand is strong and fuelled by windfall bonuses, and on the other, the Bank of England has been given responsibility for deciding on interest rates. Six groups were surveyed, including the general public and five specialist groups such as labor unions and economists. The specialist groups all gave a lower figure for their two-year inflation forecast than in Mar 1997, though there was no change for the one-year average. The public gave a higher one-year figure and an unchanged figure for two years.

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UK economy: time to tighten

Article Abstract:

UK economic growth has continued to strengthen in 1st qtr 1997 which has aided public finances. Domestic demand is strong but exporters have been hit by the high value of pound sterling. Underlying inflation has dropped to 2.5% compared with 3.3% in fall 1996. There is a danger of inflationary pressures increasing, and monetary policy should be tightened in order to combat this. Exporters are likely to be affected by a rise in interest rates but delay would involve a risk of increased volatility.

Interest Rates, Monetary policy

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Pounded down

Article Abstract:

UK inflation expectation have improved in Mar 1997 compared with Jan 1997. Average forecasts for inflation in a year's time have dropped to 3.3% in Mar 1997 compared with 3.4% in Jan 1997, and forecasts for inflation in two years' time have dropped to 4% from 4.2% in this period. The general public sees inflation as likely to be higher than specialists such as economists and investment analysts. This may be because the public has less awareness of the impact of a high value for pound sterling.

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