Worldwide Financial Planning

Take time to choose your IFA, your financial decisions, your ‘any’ decisions. Also, apply zero based thinking after you have made a decision. We often protect our mistakes to avoid the stress, but this isn’t good.

The outbreak of pessimism was due to a combination of another strong reading for US Core PCE inflation, the Fed’s most keenly watched measure of inflation, and surprisingly strong employment data. In addition, the Fed appears much keener to return to rate hikes than previously appreciated. The minutes of the Federal Open Markets Committee are usually dry affairs but the account from last month showed most members are in favour of further hikes.

To explain the hoodwink. If inflation rose one per cent next month alone and nothing for the next 11 months, inflation would be one per cent. But in 13 months’ time, the one per cent rise for next month would have left the year- on-year figure ie for those 12 months, inflation is flat – zero per cent.

Aside from encouraging central banks to stay the course, the BIS pointed out that getting inflation down is made harder when fiscal policy is running counter to monetary policy. The BIS’s solution is to encourage developed governments where inflation is a problem to raise taxes or curb spending as the fastest way to end the inflation problem.

Inflation generally occurs when there are too many chasing not enough. Inflation is monitored in consumer prices and also in consumer services and goods. The real inflation has been in assets, and assets that the very wealthy have, and those assets have been much greater than inflation of consumer goods and services.

The Bank of England increased base rate by 0.5% as inflation again proved more resilient. The Monetary Policy Committee was expected to hike rates by 0.25% but opted for a larger hike as the bank said a lack of action now risks making problems worse later on.