Yesterday's letter from Mervyn King to Alistair Darling, formally notifying him that inflation had breeched the 3pc level, has been met with a mixed reaction from fund groups.
RLAM's economist, Ian Kernohan, advised that the economy needed to slow down, suggesting that the MPC is "loathe to precipitate what they would view as an unnecessary recession by raising interest rates at this stage." Paul Niven, head of asset allocation at F&C Investments, said he was concerned but not surprised regarding King's assessment that inflation "is likely to remain markedly above target until well into 2009". Inflation is viewed as likely to exceed 4pc at its' peak in the second half of this year. Niven said: "There are no direct implications of the letter, in terms of an i...
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