BOE Now Expected To Hike Later Post Poor GDP Data

inspector_monkfish

Euphoria1z wrote: »

im abit confused. When are they now expecting to start raising rates?

did you not read it?

it says september, rather than previously believed to be July.



i still say it wont happen though!

RenovationMan

smeagold wrote: »

You mean the old spare capacity argument? not when your a competitor in a global market for commodities, you know food fuel that kind of stuff, and your currency is depreciating.

If you are a competitor in a global market, the last thing you need is a strong currency. Look at how China has resisted pressure to detach its currency from the dollar.

An export led recovery and an export led economy is the only viable option. We tried having an economy based on everyone providing a service to everyone else and the financial sector and look what happened. The country needs income.

A solution to the issue with fuel affecting haulliers, which in turn affects foodstuffs is to do what the government are contemplating and reduce the duty on fuel for haulliers. Remember, most of the cost of fuel is in taxation. I can imagine a scenario where fuel costs for individuals goes up to offset reductions for haulliers and public transport companies. Fine by me, I'm sick of all the cars on the road. You only have to walk around any UK housing estate at night to see the ridiculous number of cars per household, clogging the streets.

Euphoria1z

inspector_monkfish wrote: »

did you not read it?

it says september, rather than previously believed to be July.



i still say it wont happen though!

yeah, but was just a bit confused by this bit-

"The second rate hike is now seen in January 2011 vs previous expectation of a rate rise in December this year"

Mexas

RenovationMan wrote: »

You only have to walk around any UK housing estate at night to see the ridiculous number of cars per household, clogging the streets.

What are the other consequences though? Less people buying cars? Germany and France will really be up **** creek.

smeagold

Didn't new car registrations drop by 20% or something last month? another signal of an imminent housing boom

inspector_monkfish

Euphoria1z wrote: »

yeah, but was just a bit confused by this bit-

"The second rate hike is now seen in January 2011 vs previous expectation of a rate rise in December this year"

ah righto, what they are meant to be saying is....

1st rate hike was expected July, now its expected September
2nd rate hike was expected to follow in December, now its January 2012

RenovationMan

I wonder if that sentance guy will carry on voting for a rate rise. It will be a good guide as to whether his rate rise calls were for the publicity or because he actually thought the economy needed them.

If he sticks to his stance, it makes you wonder whether it would take a sustained period of deflation before the bloke admits he was wrong.

smeagold

RenovationMan wrote: »

If you are a competitor in a global market, the last thing you need is a strong currency..

Only if you have an export economy to begin with, our maufacturing is a pitiful 14% where as service(ie consume) is closer to 70% hardly a recipe for miracle growth. why do you think the trade balance is always negative. a weak currency may benefit a few industrialists, export company owners, farmers who export etc, for everone else its bad news

gagahouse

smeagold wrote: »

You mean the old spare capacity argument? not when your a competitor in a global market for commodities, you know food fuel that kind of stuff, and your currency is depreciating.

oh yes, the spare capacity that just sits there waiting in the wings for demand to come back - the truth is the BOE nor anyone else can measure the "output gap" sufficiently to ever really know what capacity utilisation is

also some of that capacity has been destroyed as it becomes uneconomical to maintain idle factories which become mothballed for example

Heyman_2

RenovationMan wrote: »

I wonder if that sentance guy will carry on voting for a rate rise. It will be a good guide as to whether his rate rise calls were for the publicity or because he actually thought the economy needed them.

He's leaving the MPC soon so I've heard - probably to get a cushy newspaper column or be popping up on financial TV programmes a la Blanchflower.