eWealth Global

eWealth News

Stay up to date with the latest industry insights and news from eWealth Global

Contact Us »

That inflation monster? It just got smaller

There may well have been a small sigh of relief emanating from the Treasury at midday today as the Monetary Policy Committee published its decision on interest rates.

Not because of the obvious stuff.

Few, if anyone, seriously thought the Bank would move on rates, up or down, in its last significant communication before we pack up, leave the office and promise not to be rude to our nearest and dearest for at least a day or two.

And the Bank also predictably maintained the level of quantitative easing - the purchase of government and corporate debt - to support the economy.

No, the sigh of relief will have been over a couple of sentences buried rather lower in the MPC minutes.

"Since the Committee's previous meeting, sterling's trade-weighted exchange rate has appreciated by over 6%, while dollar oil prices have risen by 14%," the Bank said.

"All else equal, this would result in a slightly lower path for inflation than envisaged in the November Inflation Report."

Yes, the Bank still expects inflation to rise above its 2% target, but possibly not as quickly and by not as much as it expected last month.

That is important for the government which has said that it wants to oversee an economy that works for everyone.

For many, that means an increase in real incomes which have remained in largely stagnant waters since 2008.

Yesterday, the Office for National Statistics said that wage growth had strengthened slightly to 2.5%.

If, at the same time, inflation risk reduces, then millions of voters might, finally, begin to feel a little wealthier.

Which, as far as the Treasury and the broader government are concerned, is good news.

What We Offer

Connect with us
Linked In FaceBook Twitter eFX Login Sign Up

About eWealthGlobal

At eWealthGlobal our mission and values are to assist individuals and businesses throughout the world to reduce expenditure and increase wealth through simple to use technology and services.