tag:blogger.com,1999:blog-5989083715376710493.post3804516327842113705..comments2013-09-30T16:30:11.501+01:00Comments on The PolEcon Brief: Inflation isn't the problem. Stagflation could be.Paul Goldsmithhttp://www.blogger.com/profile/05930296820835196694noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-5989083715376710493.post-68950572387056767342011-04-04T18:51:03.766+01:002011-04-04T18:51:03.766+01:00We do have control over the effect of oil prices o...We do have control over the effect of oil prices on inflation - we simply lower the fuel duty. We also have in theory some control over food prices - in that we could subsidise them or set a maximum price ceiling - although hell will freeze over before that happens. <br /><br />I talked about control because I was listing possible policies and explained why exchange rate manipulation can't be one of themPaul Goldsmithhttps://www.blogger.com/profile/05930296820835196694noreply@blogger.comtag:blogger.com,1999:blog-5989083715376710493.post-59240582477644754832011-04-03T22:49:32.865+01:002011-04-03T22:49:32.865+01:00You were listing the reasons for inflation being a...You were listing the reasons for inflation being above target. What has 'control' got to do with anything? We don't have control over oil or food prices either. <br />I was merely pointing out that given the origin of many of our imports, a relatively weak Sterling/Euro exchange rate must be an issue.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5989083715376710493.post-64315486627072822752011-03-14T09:31:26.548+00:002011-03-14T09:31:26.548+00:00You're right, sterling exchange rate does dese...You're right, sterling exchange rate does deserve a mention BUT we do not have control over it. <br /><br />Growth would be helped by a devalued currency increasing export demand (which is why manufacturing grew last year) BUT it would cause a further rise in imported price inflation so that doesn't help.<br /><br />More importantly, our interest rate is at 0.5%, so it's not like we could get it any lower to help lower our exchange rate. We also don't want to get into the realm of competitive devaluations. <br /><br />If 1.16 euros is undervalued it will probably go up which could help bring down imported inflation BUT hurt growth as 60% of our exports go to Europe.Paul Goldsmithhttps://www.blogger.com/profile/05930296820835196694noreply@blogger.comtag:blogger.com,1999:blog-5989083715376710493.post-80112883296463703592011-03-13T21:08:39.064+00:002011-03-13T21:08:39.064+00:00Where did my %(percent) symbol go? :)Where did my %(percent) symbol go? :)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5989083715376710493.post-11367062432239482152011-03-13T21:07:30.559+00:002011-03-13T21:07:30.559+00:00Does the sterling exchange rate not deserve a smal...Does the sterling exchange rate not deserve a small mention given our pattern of trade? Although $1.60 ish is fairly well valued, 1.16 euros appears about 10-15 undervalued to meAnonymousnoreply@blogger.com