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Reuters Breakingviews: UK inflation an embarrassment to BoE

Tuesday, August 13, 2013 - 04:00

Aug. 13 - UK inflation at 2.8% is embarrassing for the central bank and too high for zero rates, argues Breakingviews Edward Hadas.

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So you cancellation an embarrassment for the Bank of England in two pints or zero rates. And why European company shouldn't make a fetish out of dividend payments joining me. -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- House prices. OK we've come off a little bit on CPR but it still crying. Growth is coming back it seems I've put -- and a bit of a quandary. Well Carney who he doesn't see himself in a quandary he sees UK economy is very weak and he sees inflation is basically under control. On that just seems not to really go over the evidence you look at the annual inflation rate of the last -- two full years you're you're talking about three years you're talking about. 3.2 percent rate that's well over there. The target 2%. House prices are steadily rising rate of increase is rising so it's up to three point 1% according the government figures which are probably -- -- -- conservative. I mean and the economy's picking up usually disagree wholeheartedly. I think he's wrong yeah. I am. Was where house prices one of the caveats. Well no not good gap -- -- he seems very. And that's the sinking putts but house prices up and -- and the -- bubbled. It doesn't appear in his vocabulary so did this is central banking. Pre 2007. Really central bankers thought that gas prices were at their business. They thought the financial sector was really their business they were interested in economic activity unemployment and and retail prices consumer prices. Content and it's as if Carney missed the crisis and indeed he did there was not a crisis in Canada. A little bit of a house for us government kind of well actually he left in my house for us exactly. He may -- and a -- co -- and last week I'm the man had a house press probably and I in Canada but that he has not seen bubbles and hasn't into the UK. Yeah you know -- yeah we'll wait and see but it it seems that he. Is insensitive to the kind of issues that face the UK economies -- put it in imposing a kind of global. Best practice ala 2007. On. An economy for which this is seems to be unsuitable both in its slow period candidates now. Speaking appears he's watching now. I doubt it he'll be sweating later I suspect. Right now is probably pretty happy we will we will read revisit that no doubt. I'm this other piece -- Europeans see errors should avoid stopping capex to Davies. I'm signings are -- -- -- dividends by short sets and this is a problem. Yes you know dividends are a bit of a fetish and a lot of companies and for good reasons you know that's what shareholders want to it's -- way to get your return. But right now you if there is evidence as the that the -- -- are rises companies are profits are under pressure. That. That at some managers are saying what we really have to keep dividend up and will cut into capital expenditure on Katrina utility sector. On bad idea we're saying and for the very obvious reason that your future is in your capex and not a very good and to what extent does the shareholder is the talk show out of long term. I think they want some short term -- right now an -- is the point. -- that is the point and one of the -- managers is to resist the self destructive. Desires of shareholders just as parents. Tell their children that they shouldn't have little -- because it's bad for them. In the long term -- even though they gives an immediate satisfaction. I got to do her own work so that for a decent job you must tell your shareholders that you do not know what is good for you. And of thanks and off of that and what pat -- I don't senate's Arafat -- is breaking news more tennis heading inside what's our US. Break you be shown every day twelve birdies in seventeen -- bsc IMAX the proposed instructions. --

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Reuters Breakingviews: UK inflation an embarrassment to BoE

Tuesday, August 13, 2013 - 04:00