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Report on interest rate, exchange rate and inflation report on Safeway Plc.

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To: Mr Elkon From: Karan Varma Date: 20th June 2004 Report on interest rate, exchange rate and inflation report on Safeway Plc To Mr Elkon 1.1 In this report I will talk to you about three different rates, can effect Safeway and if the effect will be good or bad. I will be talking about > Interest rate > Exchange rate > Inflation Interest Rate 2.1 The government decide by how much the interest rate moves either up or down. The government have two way of affecting the economy they are the fiscal policy and monetary policy. 2.2 I will be talking about the monetary policy it involves changing rate. ...read more.


Higher interest rate in the UK results in savers from abroad putting their money in UK banks. To this they will need to buy pounds, and this make pounds more expensive. This will be good for farmers across the world that export groceries product from the Asia and South America continents, country that are normally hot because it will be cheaper for Safeway to buy from others continents or to buy imports. It wont be good for Safeway if theys is low interest rate as they will suffer. Exchange Rate 3.1 An exchange rate is simply the price at which one currency can be traded for another currency. ...read more.


This is the reverse of everything I had said about if they were strong pond. Inflation 4.1 The unemployed suffer most from unemployment, Safeway does suffer the most from inflation. If a business do well like Tesco, Asda then they will be more people employed. The government believes that the best way to solve unemployment is to try to have low inflation rate for companies like Safeway. 4.2 Inflation does make it difficult for Safeway because they have to constantly changing they prices this mean reprinting the cost and explaining to the customer why the prices have gone up. 4.3 In the 1980's the inflation was at it highest ever over 15% the highest it's been over the past 24 years. Today the inflation rate is about 2.5% and it's very difficult for the government to decrease the inflation rate. ...read more.

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