Financial Times FT.com

Higher rate rises may be needed to contain inflation

By Tim Congdon

Published: September 27 2006 03:00 | Last updated: September 27 2006 03:00

From Prof Tim Congdon and others.

Sir, High monetary growth is invariably associated, in the medium and longer terms, with inflation. Although the current welcome decline in oil and gas prices may depress headline inflation in the next few months, this should not disguise underlying concerns about domestic inflation. Inflation involves systematic increases in prices in general; it is not defined by the idiosyncratic path of individual prices.

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