What is interest rate likely to rise to?

Limes

Market_Oracle wrote:

Oh well, back to watching day to day gyrations and leaving the big picture to unfold overtime....

My sentiments exactly. . . probably more useful for this discussion for people to have just picked a number out of the air. . .55.25% by January 2007. . . We're doomed, doomed I tell you all!!!!:eek: :eek: :eek: Sell all you have and learn to live off berries and wild truffles! While some of you were arguing about something nobody can really pinpoint with much accuracy the really clever ones amongst us were watching Ray Mears Extreme Survival:rotfl:

Facetious, maybe, if only I could be sure I was spelling the word right. . .

free4440273

as i have said in my previous posts above rates are far too low (and real rates certainly are too low). rates currently should be about eight per cent. inflation is way above 2.4 per cent. council tax and public transport costs are all about to substantially increase also. items of clothes aand food are increasing every month. the more the BofE delays, the higher rates will have to rise: they are simply putting off the inevitable. ps. people were saying the fed would cut rates soon - sliding dollar might postpone that idea.

ashm1

Hi,

I see US economic growth has been 'revised up'. I suppose this makes a rate cut less likely... but I see Ford is really struggling http://news.bbc.co.uk/1/hi/business/6077234.stm

Maybe Bond driving a Mondeo will help.

http://business.guardian.co.uk/story/0,,1959980,00.html

Kind regards,

Ashley.

melbury

ashm1 wrote:

Hi,

I see US economic growth has been 'revised up'. I suppose this makes a rate cut less likely... but I see Ford is really struggling http://news.bbc.co.uk/1/hi/business/6077234.stm

Maybe Bond driving a Mondeo will help.

http://business.guardian.co.uk/story/0,,1959980,00.html

Kind regards,

Ashley.

No wonder that Ford won't help me out with my car problem then.
Sorry to change the subject, but I don't suppose anyone has got a name of a top exec at Ford UK plus the address to write to - would be appreciated.
Thanks.

cloud_dog

Market_Oracle wrote:

The whole purpose of raising and lowering interest rates is to control inflation, which is the system we have been living under since the early 1970's which is through the control of money supply !

UNFORTUNATELY ! Goverments like people have forgotten those lessons of the 70's and 80's due to the twin deflationary effects of China and Japan.

Countries such as the US and UK have let their money supplies soar... this will and IS inducing FUTURe inflationary pressures which we are starting to experience now.

Before people start correcting me, yes its far more complicated than that !, as credit is also a function of the money supply, and we have a very big credit bubble to say the least ! Which when it implodes ! :eek:

Anything could set it off, a US housing slump perhaps ? Or hedge funds like dominos going bellyup ? Or what about the dollar falling ? No ? could not happen ?, all three are already making big ripples in the waters !

Oh well, back to watching day to day gyrations and leaving the big picture to unfold overtime....

MO, not sure if you misunderstood my post, the point I was making was that the IR is of less importance than the difference between IR and inflation rate (yes, I know very simplistic).

The issue we will find the answer to in the comming months/years is how determined the central banks (governments) are at trying to control inflationary pressures. The US is probably in the worst position, i.e. they need to hold / lower IR to stimulate the economy (add liquidity) but this will only increase the pain for its citizens as asset inflation will continue to rise. They are also in a bad position regarding pressure on the $ which again adds to the effect of inflationary pressures to US citizens.

Me, I think asset inflation is comming (here?), although I think the UK and Europe have room for further rate rises.

cloud_dog

Market_Oracle

Limes wrote:

My sentiments exactly. . . probably more useful for this discussion for people to have just picked a number out of the air. . .55.25% by January 2007. . . We're doomed, doomed I tell you all!!!!:eek: :eek: :eek: Sell all you have and learn to live off berries and wild truffles! While some of you were arguing about something nobody can really pinpoint with much accuracy the really clever ones amongst us were watching Ray Mears Extreme Survival:rotfl:

Facetious, maybe, if only I could be sure I was spelling the word right. . .

The future is unknown, all one can do is speculate of what it could be, which is what investing is all about

As for the US, as cloud dog says, they are damned if the do and damned if they don't - raise interest rates.

They probably SHOULD raise interest rates, for as far as i can see all the US is doing is delaying the enivatble when the eventual crunch will be far more severe, better do a thatcher and get the pain out of the way quick and sharp , rather than do a japan and suffer for 15 years !

cloud_dog

For those still pondering the OP question, the below article may be of interest:

http://www.safehaven.com/article-6407.htm

cloud_dog

free4440273

makes no difference if, as seems likely, the pound DOES reach $2 - the fact is inflation IS higher than the 'quoted' 2.4 per cent, council tax is on the increase, so too food, clothes, transport, utility bills and (excluded from i know) those itsy bitsy house price increases. I still stand by my original posts: rates heading up to 8 per cent into 2007. ironically, the sooner they do raise rates, the sooner they can lower them - but, as i keep saying, they don't actually seem to know what they are doing (in other words, they are dead worried, and they are right to be so). remember, all of this in the context of a decrease in the oil price - what do they do when futures push up the price of oil again??? have a lovely evening everybody

cloud_dog

free4440273 wrote:

makes no difference if, as seems likely, the pound DOES reach $2 - the fact is inflation IS higher than the 'quoted' 2.4 per cent, council tax is on the increase, so too food, clothes, transport, utility bills and (excluded from i know) those itsy bitsy house price increases. I still stand by my original posts: rates heading up to 8 per cent into 2007.

Free, whilst I am in general agreement with your opinions (am currently 30% cash, 25% gold/silver) I can't see 8% IR during 2007.

cloud_dog

FaTB

codetown wrote:

I doubt rates will grow that much.

Global economy is slowing down (see USA data) and there are serious worries about the biggest contributor to the inflation, i.e. house prices, which are predicted to stop growing very soon.
My view is that in 2007 we will have a slow-down of things (both inflation, economy growth and consequently interest rates) and from 2008 an almost standstill situation for a few years.

So my bet would be this time next year BOE <= 5.5%, and in 2008-2009 BOE never exeeding 5.5%

Whilst I agree with your view on IR's, I also would be suprised if they went past 5.5% in'07.

But not so sure about your comment on the effect of house prices slowing down.

I believe i'm right in saying "Officially" house prices should have no effect on the BOE's decision, as they are not included in the CPI measure of inflation that Gordon prefers them to use.