IR to rise again next month

aardvaak

Should we take a poll on this list of people who want rates to rise and those who don't?

Arch-Angel

We've all got our opinions on here about IR rises (or falls) - even the experts can't agree!

However, there is this link:

http://www.timesonline.co.uk/newspaper/0,,176-2382654,00.html

INTEREST rates will be in the spotlight this week amid expectations that the Bank of England will soon be hiking them for the second time this year.

The European Central Bank is set to raise its key interest rate from 3% to 3.25% on Thursday.

Amid conflicting data, including a downward revision to second-quarter gross domestic product and figures showing a record fall in credit-card lending in August, most analysts expect the Bank’s monetary policy committee (MPC) to leave Bank rate on hold at 4.75% this week and to hike next month.

But the “shadow” MPC, which meets under the auspices of the Institute of Economic Affairs, says there is no reason for the Bank to delay. The results of its meeting, released today, show a 6-3 vote in favour of an immediate rise.

There's more information in the link (this is just the first 4 paragraphs) but it seems likely that we will see a IR rise before the end of the year. December would have political issues - puts the "great unwashed" off their turkey - but Oct/Nov is fair game.

PoorDave

The chances are we'll see another rise before this year draws to a close, but realwildone is so smug about it that i always want to argue against his insistance that he knows when the rise will be.

Zammo

ashcarrot wrote:

Inflation is actually 2.5% (rising from 2.4% recently).

2.5% according to heavily massaged government figures. The real rate is more like 7%.

ManAtHome

...not if you buy 15 plasma tellys a year...

Money supply increase (which eventually ends up as real inflation) has been near or over double-digit since NuLab took over. Martin should really have a word with GBH about his credit card (PFI, public sector jobs) and consolidation loan (whoops giz another 30 odd billion please, we're 'avin a boom!) habit.

PoorDave

Zammo wrote:

2.5% according to heavily massaged government figures. The real rate is more like 7%.

Got any actual evidence to support this claim, or are you just picking numbers out of the air?!

mystic_trev

PoorDave wrote:

Got any actual evidence to support this claim, or are you just picking numbers out of the air?!

CPI is currently 2.5% and RPI 3.5% but these don't include housing. Manathomes comments about Plasma screen TV's is not far from the truth, plus Ipod's and other gizmo's which help make up the CPI "basket" Maybe what people should be asking themselves is "am I spending 2.5% more on goods than last year?" The answers probably no, and more like 5% and even more with increased housing costs.

Not fact just my opinion!

Hereward

mystic_trev wrote:

CPI is currently 2.5% and RPI 3.5% but these don't include housing. Manathomes comments about Plasma screen TV's is not far from the truth, plus Ipod's and other gizmo's which help make up the CPI "basket" Maybe what people should be asking themselves is "am I spending 2.5% more on goods than last year?" The answers probably no, and more like 5% and even more with increased housing costs.

Not fact just my opinion!

From the National Statistics website (figures are all August 2006):

CPI = 2.5%
RPI (includes mortgages) = 3.4%
RPIX (excludes mortgages) = 3.3%

As you can see mortgage repayments only ad 0.1 percentage points to RPI; however, it should be noted that all inflation is individual. That is, you should only be concerned with the changes in price of the things you buy or want to buy, all other price changes are irrelevant.

sm9ai

PoorDave wrote:

Got any actual evidence to support this claim, or are you just picking numbers out of the air?!

The problem is the inflation measure is always changed to make inflation less.

So whatever it is, its not very believable.

They remove things that go up in price and add things that keep going down in price.

Pobby

Imho inflation is way ahead of published figures.Plasma screens and the like are not essential.Housing,gas,electricity,and for many petrol/diesil,are basic living requirements.Throw that into the equation and I think that the figures would be at 7% plus.

Clearly it is not in the govenments interest to raise rates by much.With so much borrowing over the last few years the results would be catastrophic.However we are in a global economy which will decide interesr rates at the end of the day.