Readers Question: What is the relationship/theory between the OCR (Official Cash Rate) and Inflation? The Official Cash Rate is the interest rate the New Zealand Reserve Bank use to control inflation. It is very similar to the base rate used by the MPC, Bank of England. Graph Interest Rates New Zealand Because New Zealand commercial …
Readers Question: Could deflation lead to devaluation of the UK Pound? Deflation in the UK means prices fall. This hasn’t happened since the 1930s, but, if it did happen, it could lead to a further depreciation in Pound Sterling. Firstly, deflation would mean interest rates would likely fall to 0%. This fall in interest rates …
Readers Question: Should we worry about water running out? In a way, water is a renewable resource. From a global perspective, water is almost infinite in supply. However, there can be serious water shortages in local areas. This is becoming an increasing problem due to population growth, climate change and rapid economic growth. Also, it …
After several years of rapid growth, 2009, will prove a testing year for India. Inflation Inflation continues to pose a threat. Inflation peaked at 12% in early August ’08. Inflation, is being caused by rapid growth (demand pull factors) but, also the cost push inflation factors (rising oil prices). Hopefully, the fall in oil prices …
Readers Question: Do you have any predictions for the AUS$ against the GBP in 2009? Thanks Both, the Australian and UK economy faces a year of uncertainty and sluggish growth. It is really a question of which will be weakest. However, I think the Australian economy and currency will be hit harder than many in …
National Statistics online has had a well overdue make over. The new web design takes up the whole screen and is easier to navigate and read. It also comes with RSS feed which is useful For any economist, National Statistics Online is a very useful resource for finding latest data and statistics and understanding some …
Readers Comment It is shocking to me that revenues from all my future income tax and even my young children’s future tax payments have already been committed by our national debt. If it is not some kind of nefarious carve-up, why would the UK wage 2 unnecessary wars costing billions when we do not have …
Readers Question: I understand why, generally, low inflation is considered to be a good thing and why high inflation is bad particularly if you have savings whose value in real terms then diminishes faster. What I do not understand is why inflation is not in fact a good thing for those of us in their …