Downing Street Says » Inflation and Interest Rates

» Tuesday, April 17, 2007

Inflation and Interest Rates

Put to him that Tony Woodley had warned employers across the UK to expect pay claims this year in excess of 4.8 percent to reflect the rise in cost of living in Britain, did the Prime Minister think this was helpful, the PMOS said that the Prime Minister would point to the full content of the letter from the Bank of England which predicted confidently that inflation would go down and that is what people should draw reference to. Put to him that the Bank of England is only saying that inflation will go down if interest rates go up, the PMOS said that it was not for him to interpret the words of the Bank of England but what the Prime Minister was also referring to was one of the reasons for the rise in inflation was the rise in energy prices and those are the way down, particularly household gas prices.

Put to the PMOS that the last time the Bank of England said that inflation was going down they got it wrong, why should we trust them now, the PMOS said that again it was not for him to give commentary on what the Bank of England have said, simply to note what it does say, and to recognise the import of what it says.

Put to him that wholesale gases prices may be falling but these reductions were not being passed on to the consumer, the PMOS said that that was not an accurate reflection of reality.

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