UK economy: back to trend

Article Abstract:

The UK economy appears to be increasing its growth rate, according to Goldman Sachs. Inflation may not be a problem since price and cost pressures have not emerged from business surveys. UK interest rate policy appears to have little impact on the economy. Interest rates could be cut if inflation remains subdued, but it is more probable that they will not be changed in from Aug 1996 to the end of the year. A rise in interest rates is likely to be needed in 1997 in order to reduce inflationary pressures in 1998.

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Base rates: false pessimism

Article Abstract:

UK interest rates are forecast to rise in 1997, but the view of a 1% rise could be too pessimistic, according to HSBC Markets. The market has tended to forecast higher rates than have occurred in the five years to 1996 since rates are lower than usual for the long term. There are factors that could depress inflation and so the need for rate rises. These include competition from low-wage economies abroad and other structural changes. A rise in the value of pound sterling could also help keep rates low.

Interest Rates

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Mr Brown's headache over sterling

Article Abstract:

The UK chancellor, Gordon Borwn, faces a problem in the high value of pound sterling. A rise in interest rates may be advised by the Bank of England in order to prevent a drop in the value of the pound which would lead to inflationary pressure. The pound is seen as strong partly because interest rates are expected to rise. A strong pound is likely to affect UK exporters. Stable interest rates could lead to a consumer boom which could lead to inflation rising.

Administration of General Economic Programs, Currency Stabilization Programs, Economic aspects, Pound (United Kingdom), Currency stabilization

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