inflation likely to go up in 2H

[Deleted User]

Trichet is on bloomberg and says that inflation is likely to increase quite soon

So rates are likely to rise sooner than we all thought

tradetime

kittie wrote: »

Trichet is on bloomberg and says that inflation is likely to increase quite soon

So rates are likely to rise sooner than we all thought

I'd be surprised if that were the case, but hey I've been surprised before.

purch

Trichet is on bloomberg and says that inflation is likely to increase quite soon

He's been saying that for the last 15 years :eek:

They won't allow you onto the Board of the ECB unless you have a tatoo saying that on your a*se and don't repeat the mantra twice daily whilst kissing the feet of the statue of Helmut Schlessinger in the lobby.

purch

Trichet Says Inflation Risks Are ‘Balanced’

http://www.bloomberg.com/apps/news?pid=20601068&sid=a8HrcvPXZsZY&refer=home


Which is a slightly more 'balanced' opinion that the impression given..........

isofa

Perhaps it's all those "green shoots of recovery"

tradetime

purch wrote: »

Trichet Says Inflation Risks Are ‘Balanced’

http://www.bloomberg.com/apps/news?pid=20601068&sid=a8HrcvPXZsZY&refer=home


Which is a slightly more 'balanced' opinion that the impression given..........

LOL, I hadn't listened to him because I expected him to comment on inflation, he usually does, after all he was valiantly single handedly defending the Eurozone from that devilish fiend Inflation when everybody else was cutting rates, even after the FED turned off the inflation source.

stv1x

Can someone explain to me the potential effects of hyperinflation on interest rates? I've always thought of inflation as the enemy, eroding the purchasing power of money, but would it result in an equally significant rise in interest rates?

cos69

The large fall in the value of sterling against other currencies is already leading to a massive increase in prices as retailers restock. Bought an Epson scanner for £124 in November (that had been their regular price for the previous 3 months, not a sale price) and recommended the same to a friend - guess what the price is now £181. Same is true of a number of other products, show price increases of 20% to 30%

Interest rates are now controlled by Gordon Brown - there is no longer a link to inflation. Looks like the game is to provide manufacturing and exporters with the best opportunity to for creating jobs. Savers have never factored in Gordon Brown's thinking, made that clear when he became chancellor and replace PEPs and Tessas

turbobob

stv1x wrote: »

Can someone explain to me the potential effects of hyperinflation on interest rates?

They'd go up. Zimbabwe which is affected by hyperinflation currently has overnight interest rates of 10,000%!! But inflation rates at an even more incredible level.. But yes interest rates are a tool used to control inflation - this being called monetary policy.

EalingSaver

kittie wrote: »

Trichet is on bloomberg and says that inflation is likely to increase quite soon

So rates are likely to rise sooner than we all thought

well I guess the guy has got his head stuck up his a*** then. Or the extrapolation that this would lead to higher interest rates is erroneous.

We are headed for two potential scenarios:

- deflation (contrary to this statement)
- stagflation

The latter might occur IF the depreciation of Sterling overwhelmed all other factors which would otherwise push towards lower prices/deflation. i.e. despite every other reason to the contrary (contracting domestic economy etc.), cost of import of finished goods outweighed all other downward pressures on prices. But in this scenerio, it is highly unlikely that BOE would increase base rates to fend this off; it would be given a different 'edict'.

The one thing we are not headed for in the next 12 months is 'traditional' inflation i.e. price rises as a symptom of an overheating economy.

stv1x

turbobob wrote: »

They'd go up. Zimbabwe which is affected by hyperinflation currently has overnight interest rates of 10,000%!! But inflation rates at an even more incredible level.. But yes interest rates are a tool used to control inflation - this being called monetary policy.

So are you saying that someone saving in Zimbabwe are unaffected by hyperinflation as their interest rate goes up in proportion to it?

I see the, loose, relationship between the BOE's move on interest rates over inflation at 'normal' levels, although that's a whole different debate as to whether it's more economics than purely tackling inflation, but always wondered just exactly what happens under hyperinflation circumstances.