Interest rates to rise again

BobProperty

lynzpower wrote:

bob
wahts the update then on Hips, I appear to have missed it?

http://www.communities.gov.uk/index.asp?id=1150984

meanmachine_2

http://www.clpuk.com/swaps.htm

BIG jump in swap rates this month.

Markets appear to think a rise is likely in the coming months, followed by another in early summer.

At this rate, 5.5% by May perhaps?

Although this could all change of course.

Experts last year were predicting rates would be at around 3.5% by now.

Muppets.

ashm1

The data coming out supports future rate rises (GDP revised up, high street spending reported up ) and demand in new year wage increase settlements. Public spending is being reigned in (see for example BBC licence deal) so this will push up unemployment in 2007/8.

BOE expecting new cheaper energy contracts to reduce CPI in mid 2007. However, BOE may not be able to cut rates mid 2007 without the currency weakening significantly.It will be interesting to see what the Fed does and whether it continues to hold or lowers rates. US seem to be further on in the cycle than the UK.

Does anyone know how to analyse Gilts ?

http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/gilt/default.stm

movieman

BOE expecting new cheaper energy contracts to reduce CPI in mid 2007.

How will 'cheaper energy contracts' reduce inflation when high energy costs supposedly didn't increase inflation?

If oil rising from around $20 a barrel to around $70 a barrel didn't cause inflation, then dropping to $60 a barrel sure isn't going to reduce inflation. Similar for natural gas.

There are huge inflationary pressures just waiting to escape as soon as companies can increase prices, and they can't keep swallowing ever-greater costs forever.

And if the Chinese start exporting inflation rather than deflation, it's game over: 10+% interest rates will be just around the corner.

ashm1

movieman wrote:

How will 'cheaper energy contracts' reduce inflation when high energy costs supposedly didn't increase inflation?

If oil rising from around $20 a barrel to around $70 a barrel didn't cause inflation, then dropping to $60 a barrel sure isn't going to reduce inflation. Similar for natural gas.

There are huge inflationary pressures just waiting to escape as soon as companies can increase prices, and they can't keep swallowing ever-greater costs forever.

And if the Chinese start exporting inflation rather than deflation, it's game over: 10+% interest rates will be just around the corner.

They can't keep hiding inflation (even the BBC knows about it now). But still we're told that people are spending like mad on the high street. I've listened to a piece on five live about a report in tomorrow's Sunday Times re increase in crime in the near future. IMO that's the government pricing in a recession!

talksalot81

movieman wrote:

How will 'cheaper energy contracts' reduce inflation when high energy costs supposedly didn't increase inflation?

I dont know the details of all of this, but the above has been described as another way of hiding inflation. That is to say it doesnt really change anything, it just removes part of it from the 'inflation calculation'.

Xbigman

movieman wrote:

If oil rising from around $20 a barrel to around $70 a barrel didn't cause inflation, then dropping to $60 a barrel sure isn't going to reduce inflation. Similar for natural gas.

We don't buy oil, we buy petrol and diesal. They have been in a price range between 89p/99p for a while so their effect on annual inflation is limited.
A drop in gas and electric would bring down annual inflation by a few tenths of a point but as its already at 3.9 (or if you like the govt bullsh1t figure its 2.6ish) so that drop will only bring it back down a bit.
As already stated, retailers and manufacturers want to put up prices so that 3.9% figure actually leads to more inflation across the board as well.

To summarize; I think inflation is on the up, which will lead to interest rates going up. Pretty simple economics for the masses.
Regards



X

nelly_2

Is there a list of what is included and what isnt in the governments list of what inflationary things ?

talksalot81

nelly wrote:

Is there a list of what is included and what isnt in the governments list of what inflationary things ?

A good rule of thumb is that if something is undergoing major inflation, it will have been decoupled from the government figures!:mad:

mystic_trev

meanmachine wrote:

http://www.clpuk.com/swaps.htm

BIG jump in swap rates this month.

Markets appear to think a rise is likely in the coming months, followed by another in early summer.

At this rate, 5.5% by May perhaps?

Although this could all change of course.

Experts last year were predicting rates would be at around 3.5% by now.

Muppets.

Oh how true - Bootle was one of them - agree looks like 5.5% by the middle of the year.I wonder how that will affect "sentiment" in the Housing market.

Todays article from Bootle

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/12/26/ccom26.xml