{"id":13953,"date":"2010-10-12T09:19:43","date_gmt":"2010-10-12T13:19:43","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=13953"},"modified":"2010-10-12T09:19:43","modified_gmt":"2010-10-12T13:19:43","slug":"the-boes-dilemma-tackling-high-inflation-or-lack-of-growth","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/10\/12\/the-boes-dilemma-tackling-high-inflation-or-lack-of-growth\/","title":{"rendered":"The BOE\u2019s Dilemma; Tackling High Inflation or Lack of Growth"},"content":{"rendered":"<p><strong>By Natalie R.<\/strong> &#8211; U.K. inflation exceeded the government\u2019s 3% limit for a seventh month  in September according to a CPI report released today. The rate is well  above the 2% goal set by the Bank of England, adding to the debate over  the future of the monetary policy as the country is attempting to  recover from the recession.<\/p>\n<p>The Central Bank has been debating expanding its 200 billion-pound  ($318 billion) stimulus plan to stimulate growth as the government is  expected to begin the drastic spending cuts in order to tackle the  country\u2019s enormous debt. The concern is that such drastic cuts will  suppress consumer spending and therefore cause a double dip. Adding to  this concern was the release of a highly disappointing Halifax HPI last  Thursday, which showed that housing prices fell to a record low.  However, with inflation already above comfortable levels, sanctioning  more quantitative easing, namely pumping more money in to the economy,  may prove difficult. Expanding the monetary easing programs will  ultimately result in even higher inflation.<\/p>\n<p>There is currently a split in the BOE regarding the future course of  action. Bank of England officials are split over whether to raise  interest rates to curb inflation or add stimulus to avert the threat of  another slump. It seems unlikely, however, that any hikes in the  interest rates will occur short term. With economic fundamentals in the  U.K proving to be relatively weak, raising interest rates, and thus  limiting liquidity in the markets will stifle consumer spending and  ultimately the economic recovery. Consumer spending accounts for the  bulk of the country\u2019s economic activity.<\/p>\n<p>This debate is particularly interesting ahead of Friday\u2019s Inflation  Report Hearing where the BOE Governor and several MPC members testify on  inflation and the economic outlook before Parliament\u2019s Treasury  Committee. With the necessity of spending cuts on the one hand, and  uncomfortable levels of inflation on the other, it will be interesting  to see how the BOE will decide to act. In any case, an exciting trading  week is expected for the Pound.<\/p>\n<p><em><strong>Forex <\/strong><strong>Market Analysis provided by <a href=\"http:\/\/www.forexyard.com\/?zone_id=1398\" target=\"_blank\">ForexYard.<\/a><\/strong><\/em><\/p>\n<p>\u00a9 2006 by FxYard Ltd<\/p>\n<p>Disclaimer: Trading Foreign Exchange carries a high level of risk and                                                                                                  may     not    be          suitable     for       all                        investors.            There       is   a                                         possibility              that                      you         could                   sustain a    loss            of    all        of            your                                  investment   and                              therefore    you                       should       not                invest                 money       that         you                       cannot              afford to                       lose.   You                    should         be             aware         of              all        the           risks                           associated          with                Foreign                 Exchange                       trading.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>U.K. inflation exceeded the government\u2019s 3% limit for a seventh month in September according to a CPI report released today. The rate is well above the 2% goal set by the Bank of England, adding to the debate over<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-13953","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/13953","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=13953"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/13953\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=13953"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=13953"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=13953"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}