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Sunday, January 14, 2007

Inflation again

It seems that my (rather simplistic) forecast from mid-October was quite accurate. According to the Bank current inflation is 2.7%. This has caused the MPC to raise interest rates yet again, to 5.25%, much to the suprise of the City and the press.

This is 1.75 percentage points higher than the Euroland rate set by the ECB. Euroland has recently been joined by a new member, Slovenia, where people are already complaining about massive price increases. However, given Slovenia's marginal impact on Euroland inflation, there won't be any anticipated rate increases.

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