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The following Insider comments page is designed to provide a short opinion on topical subjects that we consider to be of particular relevance to both existing and potential clients of JCRA. 
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Comments While nobody had really expected the MPC to alter its repo rate, the market was quite relieved at the no change outcome. If it had been tempted to raise rates in response to higher inflation levels, this would have been the month to act as it would then have had the ability to use the forecasts contained in the release, this week, of the Quarterly Inflation Report as justification of its actions.
EUR rates fell on similar reasoning. While the ECB may claim that its sole responsibility is to control inflation, there is little doubt that it has to be concerned at the rapidly weakening economic picture across the Eurozone. Virtually every bit of economic news that emerged last week portrayed a struggling economy.
The main event of the week, however, will be the release of the Bank of England Inflation Report. While this is likely to prepare the way for the CPI inflation rate to continue to rise over the coming months, possibly to as high as 5%, we would also expect the Bank to hold to the prediction that unchanged rates will return that measure to its target 2% level within two years. Furthermore, we would expect the Bank to revise downwards its forecasts of economic growth for next year quite considerably from its current 1.5%. The Developing Property Derivatives Market 05: 2006
IAS 39 05:2006 Hedging FX risk on European Property Investment 02:2004
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