When interest rates to go back to normal many more distressed sellers?

purch

why do you think it is naive?

No, lemon thinks it's naieve :eek:

IronWolf

A bag of crisps just went up 5p at my local shop, thats 10%!

Inflation is rife i tell you

ctrlaltdelete

Really2 wrote: »

So if it does not recover people will have less money to spend how does sustained inflation carry on without wages.

What does increasing rates then do to spending?

The inflation is not caused by excess money so how will any fiscal tightening do anything other than cause further falls in spending?

If someone can tell me how inflation can carry on without wages following I am all ears. I am more on the side that inflation will fall back again as people spend less, but that may be 12 months time becasue of the VAT increase.

We have that now dont we? Wages are going up less than inflation.

I thought average earnings are going up about 2%. The official inflation figures are what about 3.3% but the real is a lot more.

You are not thinking about the worldwide crisis, you are just thinking about the UK. We import most of the things we all buy everyday so its the worldwide currency supply bubble inflating ever more every month that is causing food prices ect going up every month.

nembot

Really2 wrote: »

So you think the right thing is forget the economy and sort out the mild inflation we have due to oil, taxes and a few one off events with food.

What do you think the effect making the economy suffer would have on inflation and the £?

The BOE aim for 2% which is the expected rate of inflation per annum, we're double that already so throwing out statements such as "mild inflation" isn't reinforcing your point when that's clearly not the case.

Yes, a quick sharp shock would be far better for the economy. Perhaps this is the real crux of the matter,as some people could cope quite comfortably if rates rose to 5% tomorrow and others would be absolutely stuffed.

Just as they were when rates hit double digits, did the economy collapse... no of course not, times were hard but we got on with it!

I feel there is more to your opinion, than the opinion itself.

Graham_Devon

Can I ask a couple of simple questions?

1. When was the last time BOE interest rates went up, and mortgage rates didn't follow, and banks decided to absorb the interest rate rises to be nice to the population?

2. Howcome all of a sudden, the only part of inflation being talked about, is domestic UK inflation? I've not really seen this before. We just talked CPI. Now we got to talk about specific parts of inflation, and ignore the rest. We also have to ignore the fact that the VAT rise in Jan 2010 was supposed to have fallen out by now but hasn't. Instead, we just have to continue saying it will fall out....at some point, maybe, some time, hopefully.

3. Howcome last time we had external inflation pressures....interest rates were put up in an attempt to control inflation (2005/6). Yet now, if you believe certain people, this simply cannot happen, and wouldn't happen, and it's hilarious to even suggest it.

purch

That was 3.

3 is a few not a couple :eek:

Graham_Devon

purch wrote: »

That was 3.

3 is a few not a couple :eek:

It was actually four.

I popped a cheeky 2 questions into question 2 hoping no one would notice!

ess0two

Graham_Devon wrote: »

Can I ask a couple of simple questions?

1. When was the last time BOE interest rates went up, and mortgage rates didn't follow, and banks decided to absorb the interest rate rises to be nice to the population?

2. Howcome all of a sudden, the only part of inflation being talked about, is domestic UK inflation? I've not really seen this before. We just talked CPI. Now we got to talk about specific parts of inflation, and ignore the rest. We also have to ignore the fact that the VAT rise in Jan 2010 was supposed to have fallen out by now but hasn't. Instead, we just have to continue saying it will fall out....at some point, maybe, some time, hopefully.

3. Howcome last time we had external inflation pressures....interest rates were put up in an attempt to control inflation (2005/6). Yet now, if you believe certain people, this simply cannot happen, and wouldn't happen, and it's hilarious to even suggest it.

Question 1 interesting,the majority of lenders failed to pass on all the BOE cuts.
Its only fair they should raise them,when the rises surpass their current svr.

purch

Can I ask a couple of simple questions?

And they are not simple either !!!

HAMISH_MCTAVISH

Graham_Devon wrote: »

Can I ask a couple of simple questions?

Obviously not.

But you do seem to be able to ask complicated questions.

1. When was the last time BOE interest rates went up, and mortgage rates didn't follow, and banks decided to absorb the interest rate rises to be nice to the population?

Banks don't absorb rises to be nice.

Banks do however reduce margins to compete with each other.

And given the only way the economic recovery will be strong enough to justfiy significant base rate rises is if bank lending has improved markedly, then competition will also have returned, reducing margins.

By the way, 2004 to 2007 is a good example of base rates rising but bank margins decreasing.

2. Howcome all of a sudden, the only part of inflation being talked about, is domestic UK inflation? I've not really seen this before. We just talked CPI. Now we got to talk about specific parts of inflation, and ignore the rest. We also have to ignore the fact that the VAT rise in Jan 2010 was supposed to have fallen out by now but hasn't. Instead, we just have to continue saying it will fall out....at some point, maybe, some time, hopefully.

The VAT rise would have fallen out now, but we just raised VAT again. So now it'll be another year. Pretty simple concept.

Look at CPI-Y, which excludes tax, and inflation is right around the 2% target.

3. Howcome last time we had external inflation pressures....interest rates were put up in an attempt to control inflation (2005/6). Yet now, if you believe certain people, this simply cannot happen, and wouldn't happen, and it's hilarious to even suggest it.

The bank may make a token quarter or half point rise, but they won't raise rates significantly or quickly.

Ultimately, raising rates very far to combat tax rise based inflation in a weak economy will only kill the recovery, and result in deflation, forcing them to drop ratres again.

Which would be pointless.