{"id":14028,"date":"2010-10-14T09:11:31","date_gmt":"2010-10-14T13:11:31","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=14028"},"modified":"2010-10-14T09:11:31","modified_gmt":"2010-10-14T13:11:31","slug":"inflation-expectations-differ-for-us-and-uk","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/10\/14\/inflation-expectations-differ-for-us-and-uk\/","title":{"rendered":"Inflation Expectations Differ for US and UK"},"content":{"rendered":"<p><strong>By Russell Glaser<\/strong> &#8211; When it comes to inflation, the US stands pale in comparison to its rivals across the pond in Britain.<\/p>\n<p>Given the loose monetary policies that  have been in place since the beginning of the financial crisis in 2007,  the US and British economies are in two opposite positions when dealing  with inflation. But much of the same discussion is occurring in both  central banks as to when another round of quantitative easing will  occur. This may be fitting for the US, but disastrous for the UK.<\/p>\n<p>Today and tomorrow the US will release two key inflationary data  pieces. Today will see the release of PPI with an expectation of a  measly rise of 0.2%, while the previous month showed an increase of  0.4%. Tomorrow will bring core CPI data which is forecasted to rise by  only 0.1%. Last month core CPI was unchanged at 0.0%.<\/p>\n<p>The lack of inflation in the US is a troubling sign that could lead  to deflation and stagnant growth in the US economy. Therefore, the Fed  is preparing another round of quantitative easing. This appears to be no  longer a question of if, but when. The goal of this second parlay of  asset purchases by the Fed is to stimulate not only the US economy but  also increase inflation.  This comes in stark contrast to the British  economy which has been unable to reign in inflation.<\/p>\n<p>Following Tuesday\u2019s inflation numbers from the UK, Britain appears to  have runaway inflation. British CPI climbed by 3.1%, which was in line  with expectations. But core CPI, which doesn\u2019t take into account the  highly variable costs of food and energy products, climbed by 2.7%,  above expectations for a rise of only 2.6%.<\/p>\n<p>This bout of inflation may have been caused by loose monetary policy  by the Bank of England (BOE)  in their fight against the economic  downturn.<\/p>\n<p>But despite the rising inflation numbers, new discussions are  appearing in the British media of another round of quantitative easing  by the BOE to stimulate the UK economy, similar to their US counterparts  at the Fed. This could lead to UK CPI rates in the range of 4%.<\/p>\n<p>Typically currency traders fear inflation, unless it comes with  expectations of rising interest rates along with it. Given that an  increase in interest rates could stymie the tepid 1.2% growth in the UK  economy, the BOE will most likely not raise interest rates anytime soon.  Therefore, it appears the pound could be a fundamental sell following  any rally in its value.<\/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>When it comes to inflation, the US stands pale in comparison to its rivals across the pond in Britain. Given the loose monetary policies that have been in place since the beginning of the financial crisis in 2007, the US and British economies <\/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-14028","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/14028","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=14028"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/14028\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=14028"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=14028"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=14028"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}