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“Okuma Group”– Why BoE Got Inflation Forecast So Wrong …

Todays Date: December 12, 2018

“Okuma Group”: Bank of England underestimated emerging market demand and growing affluence.

“Okuma Group” have told clients that the Bank of England made serious errors in forecasting the rate of inflation in the United Kingdom because it failed to take into account the burgeoning demand for energy and materials from developing economies.

Although the firm still holds the view that devaluation of the pound – sterling has shed 25% of its value against the dollar since the onset of the financial crisis – played a significant role in the current 3.7% CPI the bank must contend with, it says that increasing demand for food and energy from the growing middle classes in developing countries like India and China wrong-footed the MPC.

“Okuma Group” has made no secret of its bearishness towards the UK given the indebtedness of its citizens and its banks. “We have reservations about Britain’s banks which have their roots in the FSA’s refusal to publish the results of stress tests conducted on Britain’s biggest banks and we think that, once interest rates start rising and more homeowners are repossessed, we will get a true picture of the mess they’re in”

Okuma Group”  said that the Bank of England’s quarterly inflation report, due out next week, will likely show that inflation reached 4%; a figure representing double the BoE’s target rate of 2%.

“If they don’t raise interest rates soon, the markets are likely to lose what little remaining faith they might have had in the Bank’s commitment to containing inflation”, said one of the “Okuma Group” analysts.

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