- Wage increase of 4% would make it a challenge to return CPI to 2%
- Upside surprises since May have been in core goods and food prices
- There is still a question in my mind about how tight UK financial conditions really are
- Monetary policy is not good a fine tuning and should focus on inflation
Central bankers had thought there would be much more of a slowdown by now but it’s not materializing. The risk is that they hike too hard and next year –as pent up savings and demand run out — that the bottom falls out.
Cable is down 57 pips to a session low at 1.2511.