BOE leave rates unchanged at 0.5pct......

Batchy

CPIY is not even 2% at the moment if you strip out tax /fiscal effects.

Hence, interest rates being increased will not effect these, and therefore there is no need for a rate rise...

Inflation will be on target for in Jan 2012

The stats are there if you choose to ignore them... then feel free.

In Jan 2012, when inflation is on target, what do you think merv will do, increase rates to rein it in, bit of deflation... No... he will resume meetings and holding the rates.

I dont expect rates to go up for over 12 months yet! If we get to 18 months, then Ill be remortgaging on a 65% deal. Offset locking in a rate for life.

DervProf

Generali wrote: »

What you say is right but to make a large impact on the price of imports you'd have to see a very large rise in the value of sterling.

Really ?

I keep a keen eye on the prices of PC components (mostly imported). Over the past 2-3 years, since sterling lost strength against the $, I have witnessed price increases for the fist time in decades. More recently, prices seem to be falling a little again. I suspect that it is to do with the £'s slight increase against the $.

chucky

Generali wrote: »

There is lowish inflation right now, especially if you strip out the VAT rises.

Is inflation a problem at present? Probably not for the economy as a whole although it will be causing some pain to individuals with tight budgets no doubt.

inflation is a bit exaggerated tbf - have a look at this, inflation is much more painful in the emerging markets...

All this suggests there is little to get in a lather about. Inflation is always a cause for concern. But, today, not for panic.

http://www.economist.com/node/18070150?story_id=18070150

Generali

DervProf wrote: »

Really ?

I keep a keen eye on the prices of PC components (mostly imported). Over the past 2-3 years, since sterling lost strength against the $, I have witnessed price increases for the fist time in decades. More recently, prices seem to be falling a little again. I suspect that it is to do with the £'s slight increase against the $.

You're talking about a single item. The price changes could be coincidentally moving with sterling.

Think about it. The £ currently buys $1.60. A barrel of oil is about $100 or £62.50. A year ago a barrel of oil was about $80 or £50. To send the price back you'd have to increase the £ to about $2.00. That would require a substantial rise in interest rates. That would, most likely, cripple the economy.

Thrugelmir

Generali wrote: »

You're talking about a single item. The price changes could be coincidentally moving with sterling.

Think about it. The £ currently buys $1.60. A barrel of oil is about $100 or £62.50. A year ago a barrel of oil was about $80 or £50. To send the price back you'd have to increase the £ to about $2.00. That would require a substantial rise in interest rates. That would, most likely, cripple the economy.

Majority of raw material product that is used in the manufacturing sector is imported. So has a direct correlation to the cost of finished product to export.

Smidster

Generali wrote: »

There is lowish inflation right now, especially if you strip out the VAT rises.

Is inflation a problem at present? Probably not for the economy as a whole although it will be causing some pain to individuals with tight budgets no doubt.

In what warped world is there low inflation right now unless you are fortunate enough to be buying 3D HD TV's every day?

Food prices are rising week on week (and not by small amounts) energy costs are up around 10%, travel costs are at least 10% higher than last year, clothing is increasing due to higher cotton prices. The only thing not going up is people's wage packets.

Milarky

Generali wrote: »

What you say is right but to make a large impact on the price of imports you'd have to see a very large rise in the value of sterling.

So they intentionally left rates low to 'undefend' the Pound - and engineer a 20% devalution from the long term plateau of 1.40 to the Euro - in the hope of an 'export led recovery' [incidental 'benefit': import prices rise, cost of living rises indirectly] and then the MPC says it can't reverse the process?

Why didn't they defend the Pound in the first place? If you look at history devaluations of about 14% [1949] [1967] tend to be the order of things. That means the new target for the Pound is 1.20

UK get a 'pass' by the markets because - not being in the Euro - we can reach for the devaluation pills whenever we get a headache. Had we been in the Euro, rates would be only 0.5% higher but we would have not have lost a seventh of our wealth [current rate is 1.18]

Oh and I vote May for a rise of .25% because

1) Sentance is leaving in May - so the window to change direction in rates is closing

2) Local elections will just have taken place - and the move will appear 'apolitical' if it comes just after...

Running_Horse

Smidster wrote: »

And yet another nail in the British economy.

Rates MUST rise

How will that help new small businesses?

You know, the ones who are expected to create jobs and get us out of this mess.

RenovationMan

*Sigh*

Thank god for that!

Thrugelmir

Running_Horse wrote: »

How will that help new small businesses?

You know, the ones who are expected to create jobs and get us out of this mess.

A quarter point rise will cost £250 on a £100k facility in a year.

The £250 is tax deductible. So net cost to a small company is £197.50p.

Don't confuse overdebted consumers with small business.