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Mervyn King : "Inflation may not fall back as strong as expected"

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Comments

  • WardwarkOwner
    WardwarkOwner Posts: 1,766 Forumite
    Thrugelmir wrote: »
    One fund manager yesterday made the observation that its the amount of financial stimulus in the global economy that's impacting on commodity prices. As the cash injected by QE and bank support schemes will surface somewhere and push up asset prices.

    It worked that out all by himself did he? Wow.

    What other revelations did this genius divulge?
  • WardwarkOwner
    WardwarkOwner Posts: 1,766 Forumite
    ILW wrote: »
    I your previous post you stated that things would need to be done "if inflation went way over it's current level", just wondering what you meant by "way over".

    The point was that with growth so weak, inflation would have to be much higher to be more of a factor in the decision. However a lot of these factors are not independent of one another and so you would need a very detailed scenario and then put in a lot of time evaluating it to give a considered opinion. That is why I thought you question was stupid as well as this second iteration of it.
  • ILW
    ILW Posts: 18,333 Forumite
    The point was that with growth so weak, inflation would have to be much higher to be more of a factor in the decision. However a lot of these factors are not independent of one another and so you would need a very detailed scenario and then put in a lot of time evaluating it to give a considered opinion. That is why I thought you question was stupid as well as this second iteration of it.

    But what do you mean by "much higher", 10% 20% 50%?
  • shortchanged_2
    shortchanged_2 Posts: 5,546 Forumite
    michaels wrote: »
    I have to disagree with you - if the companies had not been privatised we would still have millions of utility staff to pay as the efficiency savings would not have been made so although there would not have been any profit to pay prices would not have been lower unless subsidised by taxpayers.

    Aren't the rail companies still subsidised by the public coffers?

    Surely that can't be right if these companies are paying dividends to share holders.

    The privatisation of some of these companies really is a bit of a farce as there is no true competition.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    It worked that out all by himself did he? Wow.

    What other revelations did this genius divulge?

    And your attempt at sarcasm serves what purpose?

    I doubt that you make any attempt whatsoever to listen to informed views or debate.
  • Fedupagain
    Fedupagain Posts: 15 Forumite
    According to the Bank of England minutes there are some members who are already voting for interest rate rises to try to subdue inflation which has exceeded the targets that the BoE are set.

    Others including Mervyn King have expressed concern but are awaiting to see how the figures pan out over the next few months.

    I am not sure it would take such a large inflation leap to trigger a rise in interest rates but as you say it is a complex subject :o
  • purch
    purch Posts: 9,865 Forumite
    The pound leapt across the board on Wednesday after the Bank of England's quarterly inflation report led to renewed hope for an interest rate rise in 2011.

    Sterling was up 0.80% against the dollar at 1.6496 and 0.92% against a depressed euro at 1.1462.

    Meanwhile, the single currency was suffering against all major counterparts as European authorities began a summit in Greece to discuss the possibility of increasing bail-out funds for the eurozone nation.

    The pound's strength came after Bank of England governor Mervyn King took an uncommonly hawkish stance in his speech on inflation expectations.

    Usually-dovish King said his May inflation forecasts were based on the assumption that interest rates will rise to 0.8% in the fourth quarter of 2011 and to 1% in the early part of 2012. The Bank has upped its near-term inflation expectations to around 5% due to the impact of surging energy prices

    I don't know where you obtained that "news" quote GD, but it is complete nonsense.

    GBP would not rise because of increased inflation expectations.

    You would have to be a complete moron to buy any currency because you expected inflation in that currency to rise.
    'In nature, there are neither rewards nor punishments - there are Consequences.'
  • ILW
    ILW Posts: 18,333 Forumite
    purch wrote: »
    I don't know where you obtained that "news" quote GD, but it is complete nonsense.

    GBP would not rise because of increased inflation expectations.

    You would have to be a complete moron to buy any currency because you expected inflation in that currency to rise.

    That is unless you expected IRs to rise due to inflation.
  • michaels
    michaels Posts: 28,767 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Hmm - NS&I withdrew their last issue just before inflation started to spike - is the relaunch a strong signal that inflation will be a fair bit lower in 12 months time - after all why borrow in this way when they could get money in apparently more cheaply with a standard fixed rate product?!
    I think....
  • purch
    purch Posts: 9,865 Forumite
    That is unless you expected IRs to rise due to inflation

    Unless you "expected" Interest rates to rise to a level that would compensate you for the inflation in comparison to the other currency, you would be a complete moron.

    What interest rate would be required to compensate you for inflation of over 5%, if the currency you sold was EUR ?

    It would not be 1%, or 2%, or 3%, or...........

    The rate you would require would not be reached in less than 12 months, yet apparantly people are buying GBP now, and losing value daily until the interest rate is high enough to compensate them, if that ever happens.

    The article is complete drivel, and yet another example of the totally crap financial journalism we are "blessed" with.
    'In nature, there are neither rewards nor punishments - there are Consequences.'
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