Inflation "To go above 3% soon" B o E

roddydogs

Makes all those "It dosent really matter about low interest rates as inflation is virtually zero" arguments promoted on this website seem a bit Duff, now.!!:mad:

Lokolo

If you read the whole article they expect inflation to go above 3% due to VAT etc. but then to ease off afterwards below 2%.

BBC_Website wrote:

The UK's inflation rate will rise above 3% in the coming weeks, the governor of the Bank of England, Mervyn King, has predicted.
Presenting the Bank's quarterly inflation report, Mr King said the increase in VAT and higher petrol costs would push up prices.
But, he added, inflation would then quickly fall back below the 2% target.

jon3001

roddydogs wrote: »

Makes all those "It dosent really matter about low interest rates as inflation is virtually zero" arguments promoted on this website seem a bit Duff, now.!!:mad:

Get some index-linked savings.

cloud_dog

jon3001 wrote: »

Get some index-linked savings.

Unfortunately some people prefer 'sound bites' to sound practice.

roddydogs

jon3001 wrote: »

Get some index-linked savings.

Where?.................

D1zzy

NS&I Index linked certificates -RPI +1%

gozomark

OP is missing that fact that BoE is actually concerned inflation will be too low, even if base rate stays at 0.5%. BoE (quite rightly) focuses on inflation forecasts 2 years out, not over the next few months -the impact of interest rate changes take 1-2 years to fully filter through the economy

DiggerUK

Inflation is being confused here with price inflation.

Price inflation is little more than a reflection of were the supply and demand curves cross on a graph.

Monetary inflation is always correlated to the real value of the common currency. With the Q.E. and bailouts we seem to be dangerously close to SHTF'flation, caused by good old fashioned currency debasement.

NSI Index Linked are a good play to protect what you have.
Gold is of course much better.

tradetime

NSI Index Linked are a good play to protect what you have.
Gold is of course much better.

Possibly, but a diversified basket of commodities would be better still.

Milarky

gozomark wrote: »

OP is missing that fact that BoE is actually concerned inflation will be too low, even if base rate stays at 0.5%. BoE (quite rightly) focuses on inflation forecasts 2 years out, not over the next few months -the impact of interest rate changes take 1-2 years to fully filter through the economy

The BOE's definition of achieving 'price stability' as inflation never actually at 2% in the present but always 'on target' to be 2% in 'two years' time isn't fooling many people anymore. You can't have long run price rises of '2%' unless the rate targets it 'symmetrically' (below 2% just as much time as above 2%) Instead we have 'asymmetric targeting' courtesy of Mervin's gang - that ensures in the medium term prices stil rise at more than 2% pa

lisyloo

Can someone quickly just tell me how they calculate the Indexed linked figures.
Do they come out monthly, sot he interest you get with NSI changes monthly?

I do think they are good value right now, but need to take a view on what they might provide over 3 or 5 years.