High degree of two-sided uncertainty on inflation is understandable
- We might see higher and more sustained rise in UK inflation than expected
- We may potentially overshoot target for a more sustained period
- If economies bounce on vaccine, policy could overstimulate the economy
- In turn, also overstimulate inflation pressures
- But also reasonable to expect disinflationary trends to persist
- Costs to the economy and BOE getting these judgments wrong could be significant
Damned if you do, damned if you don't. That's pretty much Haldane's take here. But at least he is opening the door to the possibility of the BOE looking towards a quicker development in the inflation backdrop.
Further Development
Analyzing the current trading chart of Gold, I found that Gold tested our first downside target at $1,765 but there is still strong downside pressure and potential for testing of my second target.
Key Levels:
Resistance: $1,765
Support levels: $1,7
