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Central banks take centre stage

Important policy decisions could rock markets
Central banks take centre stage
  • Tough calls on interest rates and tapering loom for central bankers
  • Fixed-income investors still face a challenging hunt for yield

Life doesn’t get any easier for the Bank of England monetary policy committee (MPC). Walking a tightrope between inflation and protecting a precarious economic restart, the escalating crisis in gas prices comes on top of a spectacular rise in CPIH figures. As inflationary pressures mount, the voices on the MPC that favour raising interest rates will become louder.

Although relatively new, the consumer price index plus owner occupiers’ housing costs (CPIH) measure of inflation caused alarm when the year-on-year figure for August was, at 3 per cent, 0.9 of a per cent higher than the July number. The retail price index (RPI) measure jumped to 4.8 per cent year on year and core inflation rose to 3.1 per cent.  

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