The Daily Telegraph, August 6, Roger Bootle
There is now a vigorous debate developing between economists about inflation prospects and hence the outlook for interest rates.
Some believe that interest rates will have to rise further and others believe that they have already risen plenty far enough and, indeed, that the Bank of England is risking overkill.
One imagines that a similar debate must be taking place inside the Bank. It’s a shame that there wasn’t such a debate a couple of years ago when the Bank seemed to be in the grip of groupthink.
That led it to make a major error in under-estimating the danger of resurgent inflation. It is now extremely important that it doesn’t make another one in the opposite direction.
There are some encouraging signs that point to lower inflation ahead. In particular, global influences on inflation are now mainly trending down. Indeed, China looks to be entering deflationary territory. Global food prices have started to fall – although annual UK food price inflation is still high, albeit lower than it was a few months ago.
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