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BoE set to keep interest rates at record low
Comments
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inflation minus the VAT increase is about 2.5% - how is increasing interest rates meant to reduce an inflation rate of 2.5%?
i never had a problem with this statement , as long as we both agree that the inflation we are seeing is primarily cost push inflation.
but that then ignores all that government printing as being the primary driver at this point.
greenbubble0 -
so why should rates increase if cost-push inflation does very little? do you think cost push inflation will be the norm or it will peak where demand pull inflation will take over?greenbubble wrote: »i never had a problem with this statement , as long as we both agree that the inflation we are seeing is primarily cost push inflation.
but that then ignores all that government printing as being the primary driver at this point.
greenbubble
if you think we'll always have cost-push inflation, then that's another story.0 -
inflation is good for debt
inflation minus the VAT increase is about 2.5% - how is increasing interest rates meant to reduce an inflation rate of 2.5%?
The inflation rate is 4.4%, higher interest rates decrease inflation.
They also decrease house prices, something many bulls don't want.0 -
so why should rates increase if cost-push inflation does very little?
have you assumed that i am calling for a rate increase ? to clarify , in the rate rise poll thread from yesterday , i stated that i dont think they will raise rates until the usa do or they fire up the printing press again.do you think cost push inflation will be the norm or it will peak where demand pull inflation will take over?
cost push will be the primary driver until there can be no longer any movement on sustaining profit margins, i find it hard to see how any employer at this moment can even possibly consider wage inflation, the phrase 'perfect storm' spring to mind.if you think we'll always have cost-push inflation, then that's another story.
stagflation is baked in , until the usa/china finish there economic war with each other , as to when that will be , not a clue to be honest.
greenbubble0 -
inflation is good for debt
inflation minus the VAT increase is about 2.5% - how is increasing interest rates meant to reduce an inflation rate of 2.5%?
It is said that changes to base rate don't have any effect on inflation for a year or two. Increasing rates now would probably keep inflation down in about 18 months time.
Now, Merv stated that the increase in inflation early in 2010 was "just a blip", and it now seems it wasn't. OK, blame VAT increase/ oil price increase. I predict that keeping base rate at 0.5% now will create a higher risk of higher inflation in 2 years time than if the rate was increased slightly. Increase rates now, slightly and slowly (+1% over the next 12 months) and a) You won't cause mass repos or economic disaster and b) The BoE will look like they are doing their job and the markets will feel more confident in their ability to do their job. If inflation then turns out to be >2% in 2 years time, at least the BoE won't look more foolish than they look now.30 Year Challenge : To be 30 years older. Equity : Don't know, don't care much. Savings : That's asking for ridicule.0 -
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no....................................greenbubble wrote: »have you assumed that i am calling for a rate increase ?0 -
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maybe demand pull inflation but cost push inflation it's not so easy increasing rates has little effect - you're hoping the exchange rate will move in your favour when increasing rates.It is said that changes to base rate don't have any effect on inflation for a year or two. Increasing rates now would probably keep inflation down in about 18 months time.
whatever big Merv says, he says. what he doesn't say is probably more of interest.0 -
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maybe demand pull inflation but cost push inflation it's not so easy increasing rates has little effect - you're hoping the exchange rate will move in your favour when increasing rates.
whatever big Merv says, he says. what he doesn't say is probably more of interest.
Interest rates would have no effect on "demand pull" house price inflation, Hamish says so.30 Year Challenge : To be 30 years older. Equity : Don't know, don't care much. Savings : That's asking for ridicule.0 -
Interest rates would have no effect on "demand pull" house price inflation, Hamish says so.
I said no such thing, you cheeky beggar.“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
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