The inflation rate – at least the headline rate – which has fallen sharply in the last four reports (from 10.1% in March to 6.8% in July) has certainly contributed to the Old Lady’s expectations of aggressiveness waning, bringing the terminal rate for the English Central Bank down from close to 6.5% to the current 5.585% expected by the markets in December. Core inflation, on the other hand, is still stubbornly high at 6.9%, and so is wage growth: only this morning we heard of an 8.5% quarterly/year-on-year increase in July average earnings Including Bonus. However, it should be considered that the equation of the ... (full story)