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Déjà vu 1992 (the 2014 remix)

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  • Exactly 22 years 3 months ago the Bank of England raised rates from 10% to 15% to defend the pound. The Swedes went to 500% to defend the krona that autumn. Neither defence succeeded. Overnight the Russian central bank raised rates from 10.5% to 17% to defend the rouble.
  • Russia's position is different from the 1992 parallel. There is no fixed exchange rate, for one thing. Economic fundamentals are against the rouble, but the central bank has perhaps more credibility in its policy than did the Bank of England or the Sveriges Riksbank. Markets' current concerns focus on contagion.
  • The Euro area is offering PMI sentiment data for both services and manufacturing. Weak growth is expected to be signalled, though the PMI itself is a dubious signal these days. China's unofficial PMI manufacturing sentiment fell marginally.
  • The UK offers inflation data (consumer, retail and producer prices are available to choose from). Inflation is being kept moderate by energy and food prices, but some at the Bank of England are quick to point out the temporary nature of such forces.

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