What's Dave trying to tell Merve?

IveSeenTheLight

Kohoutek wrote: »

What makes you think that adjusting our monetary policy will have an appreciable effect on rising commodity prices (which are mainly the cause of the inflation)?

We're hardly experiencing a credit boom in this country, which might be responsible for driving up prices, in fact money supply is barely growing at all. In any case, it isn't the UK that's driving demand and much higher prices of oil, food, cotton. You should be complaining to the respective central bankers of India, China, Brazil etc, not to "Merv"!

Indeed, isn't the concensus is that the inflation is temporary and that it will be restricted as spending curbs

Thrugelmir

IveSeenTheLight wrote: »

Indeed, isn't the concensus is that the inflation is temporary and that it will be restricted as spending curbs

And often forgotten that the BOE's secondary objective is to maintain financial stability.

Low interest rates therefore suggest that the situation in general is far from being out of the mire from the BOE's perspective.

lvader

Lance wrote: »

http://www.bloomberg.com/news/2011-01-09/cameron-backs-king-in-extremely-difficult-u-k-rate-policy.html

U.K. Prime Minister David Cameron said recent levels of inflation have been “concerning” as he offered Bank of England Governor Mervyn King his support in the “extremely difficult task” of setting interest rates.
“That is what the Bank of England have to get right,” Cameron told the BBC’s “Andrew Marr Show” yesterday. “I’m in no doubt the inflation is extremely harmful, it destroys people’s savings. We don’t want to go back to having an inflation problem as we had in the past.”

I wonder what the question was?

IveSeenTheLight

Thrugelmir wrote: »

And often forgotten that the BOE's secondary objective is to maintain financial stability.

Low interest rates therefore suggest that the situation in general is far from being out of the mire from the BOE's perspective.

That would depend on interpretation though.

Granted I still believe there a significant journey ahead of us, however the real danger is behind us and the low interest rates help the country to recover from those times (debts)

Raising interest rates too early could function to return the country to the mire before financial stability could cope with it.

pqrdef

IveSeenTheLight wrote: »

however the real danger is behind us

But the dust hasn't settled yet.

The Treasury is covering near £1trn of RBS debt, and we don't know how much of it will go bad. That potential liability is the size of the whole national debt. All this deficit-cutting is just tinkering in comparison.

In other cases, notably Eurozone sovereign debt, we still don't know who ends up holding the parcel when the music stops.

And there's more bad debt coming through. US commercial property. US municipalities. And US taxpayers will shoot before they'll take the hit.

Meanwhile, the BRIC group will be bigger than the US before the end of the decade. The UK will be down in the Second Division. We've got no plans for that.

tara747

Come on Merv, hurry up and raise IRs, I am sick of the pathetic rates I'm getting on my savings!!!!!!

Generali

pqrdef wrote: »

Meanwhile, the BRIC group will be bigger than the US before the end of the decade. The UK will be down in the Second Division. We've got no plans for that.

The US consumer is 25% of worldwide consumption. If the US economy is dead then so is everyone else's in the shortish term at least.

Batchy

if he increases interest rates then RPI will go through the roof. simples...

its not the right time to increase interest rates, as all the re-alignment of the pension funds and benefits are still not linked to CPI... until that happens old merv wont be increasing interest rates...

Its a hunch but I get the feeling, thats the major motive behind all this.

David is sayin... merv your doing great, keep it up, hold your nerve son!!