Economics Nerd Central/ The Global Inflation Thread

[How bad boy]

The Bank of England notes that markets now expect Bank Rate to average 5.5% for three years - which implies mortgage misery (2 yr mortgage rates of 6% plus) will be with them till long after the next general election.
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House price falls and recession to follow?

Yep.

I wonder if there's a reason why the UK's inflation rose higher than other developed economies and is falling slower?




And why is it the markets clearly think inflation is going to stay higher longer term in the UK?



It's a complete mystery.

 

[Stacky]

Yep.

I wonder if there's a reason why the UK's inflation rose higher than other developed economies and is falling slower?

View attachment 22338


And why is it the markets clearly think inflation is going to stay higher longer term in the UK?
View attachment 22339


It's a complete mystery.

They used to have levers, brakes, access to labour from an entire continent as it demanded and now they are in a high inflationary death-loop.

 

[How bad boy]

Eurozone inflation down to 5.5%

https://twitter.com/x/status/1674704326693113856

The contrast with the UK is striking. That said, there's also significant divergence between countries, Spain's inflation is very low, (was 1.6%) Germany's too high (6.8%). Will be interesting to see if there's convergence in the full report, otherwise the ECB has a tricky problem on its hands

 

[How bad boy]

Forecasts for Bank Of England base rate to be between 5.75 (JP Morgan) and 6% (market consensus) by the end of this year.

Stubborn UK inflation may lead to 7% interest rates, economists warn

JP Morgan says risk of ‘hard landing’ for economy heightened, with higher borrowing costs hitting business

www.theguardian.com

It was 0.1% in Nov 2021, 0.75% when this thread was started 15 months ago.

 

[How bad boy]

Forecasts for Bank Of England base rate to be between 5.75 (JP Morgan) and 6% (market consensus) by the end of this year.

Stubborn UK inflation may lead to 7% interest rates, economists warn

JP Morgan says risk of ‘hard landing’ for economy heightened, with higher borrowing costs hitting business

www.theguardian.com

It was 0.1% in Nov 2021, 0.75% when this thread was started 15 months ago.

Base rate is now 5.25%.

If inflation doesn't reduce significantly in August, it'll be going up again, couple of members of the MPC wanted 5.5%.

The majority of pain is yet to come

https://twitter.com/x/status/1686998626667503617

The pain will not be distributed evenly

https://twitter.com/x/status/1687017253114449920

As per way too many other policies, the boomers continue to boom