March 24 (Bloomberg) -- The U.K. inflation rate unexpectedly rose in February after higher food costs and the weakness of the pound sustained price pressures even as Britain’s recession deepened.Worse, those three idiots (you shall not forget about Alistair Darling!), think that decreasing prices will soon resume and that they must hence inflate even faster and harder.
Consumer prices climbed 3.2 percent from a year earlier, the Office for National Statistics said today in London. The median forecast of 28 economists was for 2.6 percent.
Bank of England Governor Mervyn King wrote in a letter to the Treasury explaining the increase from the 3 percent limit that a “sharp decline” in the rate is likely to resume.So much stupidity is beyond imagination. It can exist only in the real world.
Chancellor of the Exchequer Alistair Darling replied that he welcomes King’s approach of looking through temporary effects on inflation, which officials say may be volatile because of the currency’s drop.
“February’s inflation outturn is somewhat higher than expected,” King wrote to Darling. “It is likely that over the next year CPI inflation will move below target, although the profile of inflation could be volatile.”
The Bank of England has to do whatever is necessary to get Britain away from disinflation, policy maker David Blanchflower said yesterday.
But just when you think you are seeing light at the end of the tunnel, it looks like the light is the train coming fast and that avoiding a complete wreckage is almost impossible. It also shows one more time that trying to micro-manage the economy is bound to failure because of the law of unintended consequences, that I have been talking about in the past:
March 26 (Bloomberg) -- [...] For the first time in almost seven years, the U.K. couldn’t find enough buyers for one of its debt sales when it offered 1.75 billion pounds ($2.55 billion) of bonds yesterday. The yield on 10-year gilts rose after the sale by as much as 20 basis pointsA couple of past posts that might be worth reading again:
Gilts have “only one buyer and that’s Mervyn King,” said John Anderson, a money manager who oversees about $3 billion in pound-denominated assets at Rensburg Fund Management in London. “You don’t need to look anywhere beyond that. Make your mind up, please, government. Do you want to buy gilts or do you want to sell them? You can’t do both.”