This is it!! Inflation on the rise !!

cbrpaul

I mentioned to watch out for this eariler this year !!!


How does the government control spending , by raising interest rates !!


Full story !!!

http://news.bbc.co.uk/1/hi/business/8363656.stm

dunstonh

How does the governemnt control spending , by raising interest rates !!

Money supply is another control. However, lets not forget that a relatively short burst of inflation would help consumer and Govt debt levels.

What is perhaps more interesting to note is that long term savings rates have been declining. Lenders have been using these to raise funds and the rates have been higher than they should be because of demand. They have been falling back which suggests we may see long term fixed mortgage rates fall back as well. Although the prospect of higher central bank interest rates may negate that and it could just be the banks increasing their net interest margin as they dont need the money so much now.

Joe_Bloggs

Vat will go back to 17.5% from 15% from Jan 1st 2010. I guess this will distort indices that measure the rate of change of some prices for a year.
Some suggest that quantitative easing is perhaps a sign that interest rate policy has failed to control a deflationary situation. Is there an opposite to quantitative easing if the Bank of England decides to reverse direction in this matter ?

J_B.

cbrpaul

I really dont think that sustained low interest rates is going to help/speed the recovery up !!

The sooner the better i say !!!

Joe_Bloggs

The Bank of England has managed to demonstrate that when it has very low interest rates then they are ignored by market forces. Their rates have become irrelevant when compared to those rates that the rest of us have to pay for new business.
J_B.