Look to the inflation forecasts

Is inflation really falling? I am understandably taken to task by some CoffeeHousers for claiming that it is. When Brown claimed it was in PMQs yesterday, it was submitted to me as a possible Brownie. But what he says is perfectly true, and it’s worth looking at in more detail – for this not only explains today’s rate cut, but much about the nature of the deep recession we have now entered. It also underlines what I regard as a flaw in business reporting. You can pick up the papers and find the price of shares, bonds, wheat etc. But nowehere can you read forecasts – ie, where the markets think inflation, bank rates, forex etc will be in 6 or 12 months time. If the bank knows more than you, it can sting you for an expensive fixed-rate mortgage. And Brown can claim in PMQs that inflation is falling (as he did yesterday), and then mysteriously be proved right.