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What will Mervyns excuse be this time?
Comments
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Runes says inflation will be under control within a period defined only by it's vagueness.0 -
WHat always amazes me about these threads is the apparent (and mistaken) belief from some posters that a rise in interest rates will automatically reduce inflation, and in a timely manner.
The actual process, given the current environment, would be more like this.....
BOE rase rates to combat the inflation caused by tax rises.
Hundreds of millions of pounds are removed from the economy.
Consumer spending is reduced.
Business investment is reduced.
Jobs are lost.
Consumer spending reduces further.
Tax revenue falls.
Public spending on benefits increases.
Inflation reduces.....
But then the government has little choice but to borrow more or raise taxes again. Which takes us back to square one with rising inflation.......“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »WHat always amazes me about these threads is the apparent (and mistaken) belief from some posters that a rise in interest rates will automatically reduce inflation, and in a timely manner.
The actual process, given the current environment, would be more like this.....
BOE rase rates to combat the inflation caused by tax rises.
Hundreds of millions of pounds are removed from the economy.
Consumer spending is reduced.
Business investment is reduced.
Jobs are lost.
Consumer spending reduces further.
Tax revenue falls.
Public spending on benefits increases.
Inflation reduces.....
But then the government has little choice but to borrow more or raise taxes again. Which takes us back to square one with rising inflation.......
A rise of say 0.25% would have no effect on all the above, but would send a message that the bank is actually concerned about inflation. It's all about perception.0 -
I'm slightly confused as to why "merv" needs a fresh excuse each month when he's already set expectations well into 2012.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0
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A rise of say 0.25% would have no effect on all the above, but would send a message that the bank is actually concerned about inflation. It's all about perception.
A rise of 0.25% would have very little effect on an individuals ability to service a mortgage, credit card, or a business loan.
The cumulative effect of a 0.25% rise on a couple of trilions of pounds of debt however, would be a significant reduction in spending in the economy.
And all of the above would then come into play.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
A rise of say 0.25% would have no effect on all the above, but would send a message that the bank is actually concerned about inflation. It's all about perception.
Will a rise of 0.25% make any sort of appreciable difference to the value of Sterling?
Or in other words, what good would it do?0 -
A rise of say 0.25% would have no effect on all the above, but would send a message that the bank is actually concerned about inflation. It's all about perception.
Quite true, what I find puzzling is the bullish posters tell us that a rise in rates (upto 3-3.5%) won't make any difference to the mortgage/housing market, yet when this subject arises they argue against rises like their lives depend on it.
A small rise at this time would be timely, it would indeed send a message to the markets that we do care about our currency and that it is worth more than toilet paper. It would strengthen the pound a little and perhaps reduce some of that imported inflation that is making everyone poorer.
It just seems that we are keeping the IR low to keep bailing out the over-leveraged, I for one think that these people have had enough time now to reduce their debts.Have owned outright since Sept 2009, however I'm of the firm belief that high prices are a cancer on society, they have sucked money out of the economy, handing it to banks who've squandered it.0 -
I'm slightly confused as to why "merv" needs a fresh excuse each month when he's already set expectations well into 2012.
Yeah everyone seems to have conveniently forgotten that, what a surprise.
So now we have the media hell-bent on interest rate rises so that they can write the 'BofE Capitulates' headline.
It's not a case of arguing against interest rate rises, more that there isn't a credible case for doing so at the moment, unless you count appeasing the 'it's not fair' brigade and the crashaholics.0 -
A small rise at this time would be timely, it would indeed send a message to the markets that we do care about our currency and that it is worth more than toilet paper. It would strengthen the pound a little and perhaps reduce some of that imported inflation that is making everyone poorer.
How credible do you think it would be now if the BofE did a U-turn on their current policy when they have already recently predicted again that inflation will rise before dropping back, and with no other catalyst in sight for such a change of policy?
It would be non-sensical.0
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