global overview

Monetary conditions are tight in the UK and action must be taken to slow inflation, while predictions in the US forecast a sluggish 2007, although economists are optimistic for a soft landing despite sub-prime issues

uk: David shairp, global strategist at jpmorgan asset management1 "Markets have assumed that interest rates will need to rise further before the Bank of England can declare victory over inflation. The forward market is now pricing in two more interest-rate rises, to take base rates to a peak of 5.75%. "Optimistic economists calculate that inflation will drop significantly in the next few months, due in large part to lower regulatory and utility prices. In addition, they suggest that at current interest rates, homeowners' debt service levels are close to the peak levels at the end of the...