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Inflation forecast to hit 3.9%. Impact on interest rates?
meanmachine_2
Posts: 2,624 Forumite
Interesting, if a little dry, article in The Business.
http://thebusinessonline.com/Stories.aspx?StoryId=CF0CB051-6E38-41F7-843F-B34C47E5ADAC&page=1
One forecaster suggesting inflation (RPI) could hit 3.9%.
Now if we're to maintain real interest rates, that suggests a base rate around 6%, worst case scenario.
I think it's a bit daft to extrapolate from the last few months' inflation figures. It's as silly as the Express saying, based on yesterday, tomorrow house prices will hit half a million.
Still, it's a risk worth bearin in mind as you load up on your mega mortgage.
http://thebusinessonline.com/Stories.aspx?StoryId=CF0CB051-6E38-41F7-843F-B34C47E5ADAC&page=1
One forecaster suggesting inflation (RPI) could hit 3.9%.
Now if we're to maintain real interest rates, that suggests a base rate around 6%, worst case scenario.
I think it's a bit daft to extrapolate from the last few months' inflation figures. It's as silly as the Express saying, based on yesterday, tomorrow house prices will hit half a million.
Still, it's a risk worth bearin in mind as you load up on your mega mortgage.
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Comments
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The question is, what will be the effect on sterling?
I believe Sterling is over valued due to it's deficits, and this will just add to the downward pressure when the economy slows and the housing market upward thrust stalls.
Have a look at the BBC's reporting: http://news.bbc.co.uk/1/hi/business/5250250.stm Still saying it was a shock rise.. Only to those who had their head in the sand!0 -
Can't understand the strength of the £.
Really it's just a reflection of the weakness of the world's number one currency - the dollar - and the US economy.0 -
One point that I don't understand is that inflation is being pushed higher by increasing fuel costs. Surely increasing interest rates won't have any effect on this at all but will just damage the retail sector which is already slightly fragile.0
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Cutting the tax on fuel would stop any inflation - simple and quick solution.0
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