Inflation now 3.1% ... ie up 0.3%... Base Rate follow?

ED · 17 April 2007 at 9:43AM

Today's announcement that Inflation has hit 3.10% (up 0.3%) could be good news for savers. Anyone here reckon a 0.50% Base Rate rise may result? Or do you consider the usual 0.25% is likely for May 10th?

Tax-free Index-Linked Savings Certificates from National Savings & Investments suddenly seem highly attractive! I believe the Inflation figure puts these @ equivalent of 9.88% for Higher Rate tax payers (not me, alas!)

mystic_trev · 17 April 2007 at 9:58AM

The BoE have been shown to be a bunch of incompetents, surely they must have known what the CPI figure was likely to be?

dunstonh · 17 April 2007 at 10:31AM

RPI is now 4.8%. The Govt may use the lower inflation figure but RPI is the one that reflects things a little closer to reality.

Looks like an interest rate rise is on the cards.

Milarky · 17 April 2007 at 10:34AM

I'd say it means higher rates for sure. Curious that it all seems to be falling apart for the government just as GB gets to move job! See the movement in the inflation rate summarised here

That famous 'letter' was already written according to the Guardian, it seems:

http://business.guardian.co.uk/story/0,,2059015,00.html [10am]

"The Treasury confirmed that Gordon Brown had already received a letter from the Bank's governor and would respond by 10.30am alongside the publication of the letter."

Letter from Mervyn to Gord:
http://www.bankofengland.co.uk/monetarypolicy/pdf/cpiletter070417.pdf

..and back to Mervyn:
http://www.hm-treasury.gov.uk/media/FEE/3D/chxresponse_170407.pdf

Update:
Then, at 11.30, the Grauniad uses the exchange of letters idea in it's story (remember, you read it here first)

http://business.guardian.co.uk/story/0,,2059099,00.html (you decide)

airwalk · 17 April 2007 at 10:40AM

I reckon It's Guranted to go up 0.5%.

Almost_Redundant · 17 April 2007 at 10:48AM

A rise on the cards no doubt but I dont think they will want to start a panic, so I guess it will only sadly be 0.25%.

ED · 17 April 2007 at 11:17AM

Impressed how on-the-ball you folk are. If only those in Government were likewise! Even the Pound is now above the US $2 point. Bad for exports, I guess.

bristolleedsfan · 17 April 2007 at 1:58PM

BOE wont do anything to harm mr brown chances of picking up the keys to no 10 so will be 0.25% increase, if bank of england is " wholly owned by the government" how can it be independent :rolleyes:

http://www.bankofengland.co.uk/about/parliament/index.htm

heres an alternative version to official "letter" events

http://www.order-order.com/2007/04/what-gordon-wrote-to-mervyn.html

rebeccaj · 17 April 2007 at 2:25PM

bristolleedsfan wrote: »

BOE wont do anything to harm mr brown chances of picking up the keys to no 10

oh yes, that's a very good point, and probably truer than we think. :mad:

bristolleedsfan · 17 April 2007 at 4:51PM

Former governor Edward George has already admitted that the MPC fuelled the housing and consumer spending boom ( resulting in rise in personal debt) towards the end of labours first term to avoid a recession by keeping interest rates artificially low
http://www.ananova.com/business/story/sm_2250445.html?menu=

steady__eddie · 17 April 2007 at 5:10PM

Half a percent would be nice for my retirement and comfort spending shortfall but I am inclined to lean towards a quarter as the man said, "CPI inflation is likely to fall back within a matter of months".
However, having said that, it would not surprise me if it was left unchanged given the current "power struggle" and the anticipated outcome of the forthcoming local elections.

Inflation now 3.1% ... ie up 0.3%... Base Rate follow?

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