The B.O.E decision Tommorow ..

esbo

They should increase rates to stop the pounds decline, if they don't it will decline futher
pushing up inflation you can't buck the market. Rising inflatin helps nobody not even people with mortages because, yes they might pay less on their mortage but all their other costs will rise, oils, gas, food, clothes (we don't make anything anymore), cars, holidays. Do you spend 50% of your income on mortage interest?
Sterling fell 8% last month so thats 8% which will eventually be added to inflation and interest rates, so a 1/4 point rise saved today will be an 8% rise tomorrow.

esbo

Artifically low interest rates is basically the country (BoE) printing money, it sound like a good idea at firs but as Robert Mugabe found it does not wotk in the long or even short run. I look forward to the first £1 billion pound note.

esbo

Here is some grim reading for those who think rates should not rise.
How bad must it get before the penny drops?

http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article4666578.ece

ad9898_3

A quarter point rise would do the trick, sending the correct info to the markets, stopping the pounds slide and slowing inflation.

After all the banks remit is inflation, nothing else, not even our beloved housing market. In any case the banks would just hoard any rate drop and not pass it on anyway, especially NR, B&B and A&L.

By the way Gordon Is A Moron................good old Jilted John, a hark back to the 70's, which is wear the great leader is taking us.

ManAtHome

ad9898 wrote: »

A quarter point rise would do the trick, sending the correct info to the markets, stopping the pounds slide and slowing inflation.

I floated that earlier this year (March or April I think) - at the time it wouldn't have made any difference to real interest rates (LIBOR), but the pesky foreigners would just laugh up their sleeves if they did it now - sitting on hands a bit longer I think...

Will probably cut in November once the "special liquidity thingy/Dumper-truck of Dosh" has been parked.

ad44downey

Yeah, just how does inflation have to rise to before they raise interest rates? The target is 2% but the official rate is over 5% and the real rate is more like 10%. The MPC aren't doing a very good job of achieving the target , are they? Anyone else that incompetent would get the sack :eek:

Generali

ad9898 wrote: »

A quarter point rise would do the trick, sending the correct info to the markets, stopping the pounds slide and slowing inflation.

After all the banks remit is inflation, nothing else, not even our beloved housing market. In any case the banks would just hoard any rate drop and not pass it on anyway, especially NR, B&B and A&L.

What sort of level do you see the £ at to arrest inflation by reducing the price of imports out of interest? £1 = $2 or $2.50 or $3? Perhaps back to the old Gold Standard days of $4 or $5 to the quid? A few cents on or off the pound won't do anything particularly about inflation but we could decide to destroy the economy to force up the value of the pound as happened in the UK in the early-mid 1920s.

This whole thing about increasing or decreasing interest rates by 25bps is just hubris. If you look at interest rate changes over the history of the BoE, changes have been more often of the order of 1% than 1/4%. IMO, you can't fine tune monetary policy by little 1/4 point changes in rates - it suggests that things are in some way scientific, that you can trade a smidgen of growth for a tad of inflation and a splinter of unemployment.

Life isn't that simple and as macro economics is nothing more or less than the collective decisions of millions of people it certainly isn't going to be simple.

ad9898 wrote: »

By the way Gordon Is A Moron................good old Jilted John, a hark back to the 70's, which is wear the great leader is taking us.

http://www.youtube.com/watch?v=dsyVtTHtA_Q

"I was so upset that I cried all the way to the chip shop"

He's now known as Ken Shuttleworth (Yokshire's premier singer-organist):

http://www.youtube.com/watch?v=L8eh72REd_s

I think he was also Frank Sidebottom (here performing Anarchy in Timperly):

http://www.youtube.com/watch?v=lJEk7UQIII4&feature=related

I think that last one might have been a tour or album or something as he also did Mull of Timperly and Panic on the Streets of Timperly.

ad9898_3

ad44downey wrote: »

Yeah, just how does inflation have to rise to before they raise interest rates? The target is 2% but the official rate is over 5% and the real rate is more like 10%. The MPC aren't doing a very good job of achieving the target , are they? Anyone else that incompetent would get the sack :eek:

Ahhh but GB is that incompetent and he hasnt had the sack either, perhaps this is nu labours 3rd way, lets all be cac at our jobs and maybe we can then all convince ourselves that everything is rosey, I mean look at Hazel Blears, look at her face, shes all rosey about things, she is also cac at her job and is still in it.

ad44downey

Interest rates held at 5%

Sad. They should have went UP. A missed opportunity to arrest the plunge in the value of the pound and the evil of soaring inflation. And to discourage further idiots from getting into mountains of debt.

The MPC should be sacked. They aren't doing their job. Inflation's supposed to be 2%. It's's well over 4% on the government's made-up figures and more like 10% in the real world.

Dan:_4

It was the right decision. Inflation is slowly coming down. Rate cuts by the end of the year.