OECD: BOE Should Raise Key Interest Rate To 3.5% By End 2011

marklv

Interest rates need to be raised immediately to 3.5%, not in 2011. The BoE should no longer have independence to set their own interest rates, this decision should go back to the government. Otherwise, we will see inflation hitting 10% before long and those on pay freezes and pensions (or pension funds) with no indexation or 5% limited indexation will be hammered like never before.

purch

One of my major reasons was that I expected a general continuing weakening in Sterling against the USD. I also expected commodity prices to rise as other economies, especially Asia improve, leaving the UK behind, likely falling back into recession at some point.

That has to be a likely scenario.

One thing should be clear however, raising Interest Rates will not help the exchange rate in our current fiscal mess.

lemonjelly

inspector_monkfish wrote: »

here you go....

Very good!!!!:cool::D

inspector_monkfish

lemonjelly wrote: »

Very good!!!!:cool::D

...i know

purch

...i know

Tut !!!!

Back in 'my day' you got told off if they found you reading the sports pages on Reuters. :A

Nowadays you can waste 1/2 hour looking for a picture of a drawing pin and nobody cares :mad:

No wonder we are in such a mess !!!! :eek:

RenovationMan

PasturesNew wrote: »

I want my interest back on my savings ..... I was robbed. You've benefitted. Now it's my turn again.

I gave up on savings and bought a hugely expensive house instead. Only time will tell it was folly or not, but if we continue to have high inflation and low interest rates then my gamble should pay off. Perhaps its time for you to sell up and buy a larger home too? Savings are so last century!

Generali

chucky wrote: »

my original view is that inflation was not going to happen - i'm being tempted into the inflation camp as i can't see how increasing imported costs are going to be avoided. currency devaluation obviously should cancel this out but i feel we'll still see inflation.

when i say inflation, i'm talking 5%-7% not 10%-20%!!!

I think the same thing but then I keep getting dragged back to the M4 figures. They just keep going down and down and down. In fact they seem to be the only economic indicator that is reliably sending the same message!

Without a collapse in world output potential, I don't see how M4 growth can turn negative and RPI be positive for any prolonged period.

lemonjelly

Generali wrote: »

I think the same thing but then I keep getting dragged back to the M4 figures. They just keep going down and down and down. In fact they seem to be the only economic indicator that is reliably sending the same message!

Without a collapse in world output potential, I don't see how M4 growth can turn negative and RPI be positive for any prolonged period.

Could the M4 figures be an anomoly?

Or, at the same time (as discussed on another thread) what are the indicators which are/will be lagging that we should be monitoring which would support your deflationary theory?

Generali

lemonjelly wrote: »

Could the M4 figures be an anomoly?

Or, at the same time (as discussed on another thread) what are the indicators which are/will be lagging that we should be monitoring which would support your deflationary theory?

They could be but it's unlikely. They are incredibly easy to collate I would imagine as they are based on numbers that need to be reported to the FSA for regulatory reasons and which will be audited both internally and externally.

Other things to watch for deflation are what is happening to the savings rate (that is average savings per household divided by average income per household), retail sales, unemployment and lastly and unsurprisingly, prices!

michaels

<Hamish>Why don't you MEW a bit - given the certain house price increases over the next 3 years you will overshoot your equity target otherwise </Hamish>

RenovationMan wrote: »

I gave up on savings and bought a hugely expensive house instead. Only time will tell it was folly or not, but if we continue to have high inflation and low interest rates then my gamble should pay off. Perhaps its time for you to sell up and buy a larger home too? Savings are so last century!