Where to put my money now that £ is tanking?

MiserlyMartin

gozomark wrote: »

sorry, but thats not true - the inflation target is CPI 2% +/- 1% - it was only in the Summer it went above 3%, and was within the 1-3% band throughout 2004, 2005, 2006 and 2007 (excl one month in 2007 when it went to 3.1% I believe) - the BOE record on inflation has actually been very good - see chart 5.3
http://www.bankofengland.co.uk/publications/inflationreport/ir08nov5.ppt#5

Even if you don't believe the BOE, economists are generally foreasting the same as the BOE

So good that they had to keep writing to Darling and Brown to explain why it overshot so much. OK I forgot the magical +/- 1%. 3.0% or 3.1% - not much difference but one is outside the new target range and the other isn't! But thats a bit of a cop out by the BoE - lets face it 3% inflation is a lot above target especially compared to the old days when they used the RPI and not this massaged CPI 'made up basket' rubbish. And 4.7% inflation is almost double the target. Its only recently that CPI caught up with RPI, we all knew that real inflation was higher.

gozomark

1. 3% isn't alot above target, its within its targetted range.
2. The BoE doesn't set the target range, the treasury does.
3. the Treasury sets it against CPI, from RPI (when it was 2.5% +/- 1%), not BoE
4. CPI basket is an internationally agreed basket
5. only one letter had to be written up until this Summer
6. letters aren't written because overshoot alot, but because go outside the range of 1-3% - 0.9% and 3.1% trigger letters
7. 4.7% isn't almost double, 6% is double
8. if you disagree with the inflation calculation, and choice of CPI over RPI, thats nothing to do with BoE

I maintain the BoE has actually done a really good job since being made independent. As for the lot who made them independent, thats another matter

tradetime

Charles1968 wrote: »

which just leaves shiny metals that earn no interest..

Well there is always that, I'm not really a goldbug, though I am not against holding a percentage stake in gold and silver. Though I'm inclined to think for the average bod it tends to be somewhat a waste. I would say an allocation of alternative commodities or possibly better for the average investor, commodity related stocks, that will appreciate along with commodity prices whilst delivering a dividend.

jon3001

The BoE target for CPI inflation is 2% period. Not 2% +/- 1%; that's just the limit when they're obliged to write a letter to the treasury.

gozomark

jon3001 wrote: »

The BoE target for CPI inflation is 2% period. Not 2% +/- 1%; that's just the limit when they're obliged to write a letter to the treasury.

you are quite right jon. What I should have said was - 2% is the target, 1-3% the target range. As long as its between 1% and 3% they are doing their job

jon3001

gozomark wrote: »

you are quite right jon. What I should have said was - 2% is the target, 1-3% the target range. As long as its between 1% and 3% they are doing their job

No - there is no target range. Just a target of 2% CPI.

http://www.bankofengland.co.uk/monetarypolicy/pdf/annex031210.pdf

...The Chancellor has decided that, from today, the new inflation target will be 2 per cent for the 12-month increase in the CPI. ...

2. ... Under the monetary policy framework, if inflation moves by more than 1 percentage point above or below the target, an open letter will be triggered from the Governor of the Bank of England to the Chancellor. ...