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A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Aug 06 2015

As U.K. Inflation Slips Back to Zero, What Lies Ahead?

The Bank of England (BoE) downgraded its near-term forecasts for inflation this week. With just one member of the Monetary Policy Committee voting to raise rates, the consensus now expects the next rate hike to be later than previously thought. Indeed, year-over-year CPI inflation slipped to 0% in June, remaining well under the BoE's target of 2%. In addition, retail sales fell unexpectedly by 0.2% month-over-month in June, even with the recent urging from BoE governor Mark Carney to “enjoy [low inflation] while it lasts.” So, just how long will low inflation last?

ECRI’s latest update to the U.K. Future Inflation Gauge, the value of which lies in its ability to predict cyclical turns in U.K. inflation, helps answer this question. Our analysis provides insight into the future direction of inflation, with implications for the BoE policy decisions in the coming months.

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Low Trend Growth, Productivity Hopes, and the Outlook

Bloomberg July 1, 2015

How long-term growth trends in productivity and hours worked help explain the long-term decline in trend growth ECRI first identified in 2008, pre-Lehman. More

 

Recoveries Remain Resilient

ECRI July 15, 2015

The big developed economies — especially in Europe — are not yet vulnerable to recessionary shocks. More

 

Eurozone Inflation Pressures at Four-year High

Reuters July 2, 2015

With the EZFIG increasing further to a four-year high in May, euro zone inflation pressures continue to build. More

 

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