英国通货膨胀继续上升

Let's first of all talk about the UK and those concerns about inflation and growth. This is unexpected to everyone, isn't it? At this stage?

Yeah. In fact, Max, they have a target of 2% which many people forget. They were hoping to keep this capped at 4%. So let's take a look at what I call Britain's cloudy outlook. They're saying inflation is gonna be at 5% right now and the GDP instead of being 2% for the year, coming back down to 1.7% which is pretty meager. What we are seeing, Max, is that 132 billion dollars in budget cuts are starting to bite and starting erode consumer confidence. And then this target of 2% is gonna be thrown out the door, but there was a signal going forward that had we raised rates earlier, this could be the end, as we see the market reaction in New York this evening, of easy money. Perhaps the rates in the UK have to go up in July because the inflation rate of 5% is well above the target  they were looking for.

So the assumption being that rates will increase, but how fast?

Well, we have seen now. With interest rates at a 0.5%, the market is kind of banking in on rates of another 0.5% by the end of 2011. We heard from Mervyn King

right after he put out that report this morning. Let's take a look at what he's saying and we can talk about the analysis afterwards.

Although inflation fell to 4% in March, it remains uncomfortably high and well above the 2% target. And there is a good chance that if utility prices rise further later in the year, inflation will reach 5% before falling back through 2012 and into 2013.

So after he said those signals to 2012, 2013, the British bond market sold off because we thought that interest rates would be coming up as early as July with perhaps a second increase by the end of the year as we are finding out right now, it's not just a UK problem, US problem. We're seeing the same challenges in Europe as well.

Yeah, Germany in particular.

Em, Germany with the rate of 2.7%, as you noted coming into the interview with me, the highest since Oct 2008. It looks like Jean-Claude Trichet has been vindicated with that rate increase in April by going up a quarter point then. But when he came out in May and said that he didn't give clear indications that the next interest rate increase was gonna come by the month of July. It's a delicate balancing act because when the euro fell, then we saw that sell off in commodities. So, maybe he wanted to take the pressure off the commodities, but it's a very delicate game right now as we come to the end of the cycle of very very cheap money. The market is very jittery.

He was accused of jumping the gun, wasn't he, Trichet? He's looking pretty good on it now, isn't he?

John, thank you very much indeed.

sell off [sell sth. off]   to sell something, especially for a cheap price, because you need the money or because you want to get rid of it

jittery  adj.    (informal) anxious and nervous:

jump the gun    to do sth too soon, before the right time