Inflation may force Bank to raise rates

CharlieBilly

Isnt it commodities that are behind most of the inflation anyway?

nembot

I think the risk involved raising interest rates is so severe, they'll keep them as low for as long as possible.

This is not to say they won't rise soon, it may become a necessity.

JonnyBravo

carolt wrote: »

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.

Yeah it's really baffling.
About as baffling as to why you've never started a thread on rising house prices.
You're just two sides of the same coin..... only of course, you think you're not.

carolt

JonnyBravo wrote: »

Yeah it's really baffling.
About as baffling as to why you've never started a thread on rising house prices.
You're just two sides of the same coin..... only of course, you think you're not.

I think I just heard a glass house shatter into a million pieces.

On the contrary, unlike Hamish who pretends to be neutral - or indeed, like your good self with the BTL you lied about for so long - I have never made any secret of the fact that I have an interest in my side of the argument being right.

I don't pretend - as you most amusingly did for some time until made to look like an utter ar5e - that I am totally unbiased and neutral.

JonnyBravo

carolt wrote: »

I think I just heard a glass house shatter into a million pieces.

On the contrary, unlike Hamish who pretends to be neutral - or indeed, like your good self with the BTL you lied about for so long - I have never made any secret of the fact that I have an interest in my side of the argument being right.

I don't pretend - as you most amusingly did for some time until made to look like an utter ar5e - that I am totally unbiased and neutral.

Care to show me where I lied about my BTL?
Or is it just that you mean I didn't declare it to you as soon as I posted on any subject?

I have to be careful what I disclose about my personal circumstances. I've read there are lots of lonely stalking nutter type women on the net.

Thrugelmir

carolt wrote: »

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.

That was yesterday. Today the new OBR has revised downwards the forecast of the amount of slack in the economy and also the rate of growth in the coming years.

If this is the case then the BOE will be able to hold down base rates which should stop the economy from double dipping. This is not to say that interest rates on consumer lending will not rise however.

carolt

JonnyBravo wrote: »

Care to show me where I lied about my BTL?
Or is it just that you mean I didn't declare it to you as soon as I posted on any subject?

I have to be careful what I disclose about my personal circumstances. I've read there are lots of lonely stalking nutter type women on the net.

In your fantasies, I think.

You know exactly where you lied about your BTL. You don't need me to show you and I doubt anyone else cares enough about you to make it worth proving. I certainly don't care enough.

You know you're a hypocrite. That's enough for me.

JonnyBravo

carolt wrote: »

In your fantasies, I think.

Oh yeah.... sad bitter wannabe's are the stuff of all mens dreams.

carolt wrote: »

You know exactly where you lied about your BTL. You don't need me to show you and I doubt anyone else cares enough about you to make it worth proving. I certainly don't care enough.

You know you're a hypocrite. That's enough for me.

Oh poor ol' carolt. Clear for all to see she doesn't care.... at all.... really....
Still all stirred up from when she was exposed as a hypocrite clearly.

I'll take that as a "oh, erm, no I can't find where you denied owning a BTL.... drat..... still..... prices are dropping and Hamish is wrong"


:rotfl:

PasturesNew

I want rates to go back up to where they were a few years back ... when we were warned they'd go higher. Then I'd have enough interest coming in from savings to feel confident about things.

Generali

carolt wrote: »

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

There are 2 points here:

1. Is there spare capacity in the economy or not
2. If inflation is on the rise what to do about it

1. On the face of it, record post-war falls in GDP imply that there should be plenty of spare capacity out there - just because GDP falls, doesn't mean the ability to produce disappears in general, it's just not being used. However, in the case of this recession, it is possible to argue that a lot of capacity that is not being used is no longer wanted (eg companies providing sub-prime debt, people retailing to people who are taking on ever-increasing amounts of debt) and so shouldn't be considered part of 'spare capacity'. He might have a point here.

2. QE or raise interest rates? Probably a mixture of both as the BoE will find it hard to find buyers for £200,000,000,000-worth of Gilts.

I still don't think inflation is the big risk, although clearly it is a risk. Anyone expecting a rapid rise in real interest rates is deluded, misgiuded or wrong IMO.