International Financial Market Essay Example | Topics and Well Written Essays - 1500 words

International Financial Market - Essay Example 008 because most of the investors are big institutions like the pension fund, investment funds, sovereign states, and banks. The sovereign states have significant strategic and economic considerations that inform the willingness to buy the treasury bills (Grabbe, 2006). Additionally, treasury bills are not purchased for their contribution and returns, but because they are the safest method for holding reserves. Although most people believe the risk in the financial system, the investors are ready to accept less return for the protection of reserves (Grabbe, 2006). Task 2: a) Development in the rate of inflation. Inflation in the United Kingdom experienced growth in the value of consumer services and retail sales. The two elements rose slightly during the 6 months of year, but it remained modest. Also, the housing market strengthened continuously. The intentions of investments continued to greatly aim at increasing efficiency, with minimal large expansion capacity underway. Also the m anufacturing exports grew at a moderate level (Dufey & Giddy 2008). In recent months, the output in manufacturing grew for the domestic market. Consequently, there was a modest development in the turnover of business services. The annual rate of construction output declined as the building of houses increased. Generally, the output in the industry changed significantly on previous years. Additionally, the corporate credit conditions continued to improve gradually, but various companies reported the urge to dwell on the non-bank or internal funding. The intentions in employment edged higher over the recent months but were flat for the services of consumers (Grabbe, 2006). Also, the capacity utilisation remained below normal in both services and manufacturing. The labour costs for each employee grew modestly but in stable rates over the earlier months. Material costs’ inflation fell to lower levels and remained in stable conditions for the prices of finished goods (Dufey & Gidd y 2008). The business services prices and manufacturer’s increase rate remained subdues, though the rate of profitability edged high with rise in output. Finally, the consumer price inflation rate remained unchanged. Bank of England Prospects for inflation: The Bank of England has foreseen a sustained output expansion, although the upturn pace is more likely to be tempered by financial crisis legacy. The spare capacity degree is expected to be constant for some time. The economic slack persistence is expected to continue dampening domestic inflation. Although Consumer Price Index is scheduled to remain at 3%, it is more likely to fall to a target of 2% over the prospected