Interest rates 'may hit 8pc' in two years

mystic_trev

Andrew Lilico, chief economist at the influential Policy Exchange think tank, has warned of an interest rate environment not seen since the 1990s.

He said the rise could happen as the recovery beds in and Government measures to stave off a recession lead to an explosion in the money supply.

Mr Lilico also warned of a return to "boom and bust", as ballooning inflation threatens to tip the economy back in to recession in 2013 or 2014.

"Given the constraints of late 2008 and the absurdities of subsequent fiscal, finance and regulatory policy, if we can get away with a recession of only 6.6pc, deflation of only 2pc and inflation of only 10pc for one year, [Bank of England Governor] Mervyn King will deserve a medal," Mr Lilico said.

A brief double dip recession early next year is likely, he said, but it "would be quite compatible with a boom thereafter".

http://www.telegraph.co.uk/finance/economics/interestrates/7957873/Interest-rates-may-hit-8pc-in-two-years.html

amcluesent

Yep, all the signs are for a repeat of 1977-1982, stagflation, millions idle and monetarist ideology whacking up interest rates to try and reign in inflation, ensuring a plunge back into recession, foreclosures and repossessions galore.

The BoE Governor wasn't blowing smoke when he said the election 'winners' would become so unpopular they'd be a single term administration then out of power for decades.

Unless the Condem's find another 'Falklands Factor' of course...

nicko33

amcluesent wrote: »

The BoE Governor wasn't blowing smoke when he said the election 'winners' would become so unpopular they'd be a single term administration then out of power for decades.

How would that work then?
Tory and LibDem are in now
Surely nobody will want Labour back
So our next government will be UKIP :beer:

wymondham

Horay ... I'll start saving again!

Generali

amcluesent wrote: »

Yep, all the signs are for a repeat of 1977-1982, stagflation, millions idle and monetarist ideology whacking up interest rates to try and reign in inflation, ensuring a plunge back into recession, foreclosures and repossessions galore.

The BoE Governor wasn't blowing smoke when he said the election 'winners' would become so unpopular they'd be a single term administration then out of power for decades.

Unless the Condem's find another 'Falklands Factor' of course...

What monetarist ideology? Central Banks are targeting inflation not the money supply.

Trade unions are too weak for stagflation to be likely.

Turnbull2000

Interest rates at that level would destroy the housing market. It simply won't be allowed to happen. Rates will be 2% at best in two years time IMO.

Graham_Devon

I was told only the other day on here, there is absolutely 0 chance of this happening.

Dan:_4

nicko33 wrote: »

How would that work then?
Tory and LibDem are in now
Surely nobody will want Labour back
So our next government will be UKIP :beer:

I will always vote labour and they were hardly trashed at the recent election, were they?

JoeCrystal

wymondham wrote: »

Horay ... I'll start saving again!

If it goes up to 8%, hopefully it mean that the Gilt will go up to that amount. Investing in Gilts could be worthwhile! Good news for Savers and bad news for mortgage payers.

Cheers

Joe

Exocet

I can't find the link, but someone in a paper was saying that interest rates may well reach that figure in a couple of years. Something to do with banks continuing to preserve margins rather than cutthroat touting for business.

Rainmaker_uk

Exocet wrote: »

I can't find the link, but someone in a paper was saying that interest rates may well reach that figure in a couple of years. Something to do with banks continuing to preserve margins rather than cutthroat touting for business.

That would suggest to me that interest rates will remain low. After all the media were not exactly cutting edge in spotting the .com crash, the housing crash or indeed the sub prime credit issues...

It is rarely the 'future concerns' scaremongered by the media sheep come to pass - it is the stuff they miss that we need to be concerned about.