Inflation may force Bank to raise rates

carolt

THE Bank of England could be forced to abandon its “highly expansionary” monetary policy — and raise interest rates — in the second half of the year, according to a member of its monetary policy committee.

Andrew Sentance, writing in The Sunday Times today, casts doubt on the Bank’s official view, which is that the spare capacity left over by the recession will bring inflation down.

He writes that there may be less spare capacity than thought and that it has had less impact than expected. Inflation, currently 3.7%, is higher than was expected by the Bank following the recession, and is higher than in other countries.

“As spare capacity has not exerted much downward pressure on inflation so far, there must be a high degree of uncertainty about its future impact,” said the MPC member.


http://business.timesonline.co.uk/tol/business/economics/article7148991.ece

Really2

Forecast to fall tomorrow to 3.5% down from 3.7%.

Can't see them putting up rates when it looks like it has peaked and now falling.

Diesel and petrol have stated to come back down again also (diesel has come down 5p in the last week or so near me)

Doctor_Gloom

I can see interest shooting up to well over 5% in the not too distant future. And then all hell is going to break loose.

purch

writing in The Sunday Times today

I'm gonna have to stop drinking.

I keep losing track of what day it is :eek:

Really2

Doctor_Gloom wrote: »

I can see interest shooting up to well over 5% in the not too distant future. And then all hell is going to break loose.

Could you tell me when, as I can't see it shifting that much anytime soon.

What are the forces that we can all see that will force that to happen.
Seen some of the usuals posting that a double dip is round the corner, so some are predicting recession and increasing base rate????

Does not sound like they would be targeting economic stability if they did that does it, the BOE said that the economy is their main driver on rates at the moment?

Blacklight

Interest rates aren't going anywhere until they've inflated away all the debt.

abaxas

Blacklight wrote: »

Interest rates aren't going anywhere until they've inflated away all the debt.

The only way to inflate away the debt is to allow wages to rise.

Inflation without wage inflation would just make matters worse.

maveli

With almoist every man (and woman) on the country sitting on the SVR for their mortgage how raising the interest rate going to help the economy.

chucky

two questions...

why would the BOE even entertain raising rates until the money pumped into the economy by QE is withdrawn?

why would they raise rates so that they have to pay more interest on the debt than is necessary?

chucknorris

When rates fell to 0.5% I hoped to get about 18 months out of it, well we are still here at 0.5% so every month is a bonus now

carolt

purch wrote: »

I'm gonna have to stop drinking.

I keep losing track of what day it is :eek:

You need a calendar.

Sorry I didn't post this yesterday - clearly it is my duty to post on here full-time.

Or not.


I find it really, really strange that neither Hamish nor new boy-about-the-board Blacklight found the time to post this story, seeing how important it is for house prices and all.

Very odd.