Runaway inflation force rate hike soon

chucky

chewmylegoff wrote: »

i think you just press Alt+A on your keyboard and houseprices go down, don't they?

it's actually Ctrl-F and then hit the Enter key.

Really2

Graham_Devon wrote: »

The market can hardly sustain itself even with all the stimulus.

Even the share boards I visit are now stating they are thinking of selling their shares before crisis number 2 happens (US & Greece issues).

Hardly the last roll of any dice. The housing market is in a more precarious position at the moment than it has been for a while.

What does that tell you? will they target the economy or commodity inflation they have little control over?

I like how people say the BOE will be forced to deal with the inflation?

Dear BOE,

Oil, gas, food have all gone up recently. We understand that the £ is 14% stronger than this time last year but my disposable income is shrinking.
Please, please, please could you increase the base rate as I wan't to have less disposable income and an increased risk to my job.
The 1p-2p it knocks of a liter of fuel or 1p off a loaf of bread will be a great help.

Thanks

Miss D Point.

Graham_Devon

Really2 wrote: »

What does that tell you?

Tells me no matter what the BOE run around targetting, they can't reduce rates any further (not meaningful reductions anyway) and the UK housing market can only just about survive as we are, indeed, it's not really surviving at the moment as prices are falling.

How are the BOE going to "target" anything now? More QE?

We've targetted as much as we can. We now are just sitting waiting, with our pants around our ankles hoping nothing else goes wrong.

If you could tell me what else the BOE could do, I'd be interested in that debate. But I'm not really interested in you qouting me, and then going off on a tangent about something else.

chucky

Graham_Devon wrote: »

How are the BOE going to "target" anything now? More QE?

We've targetted as much as we can.

who said that?

Graham_Devon

chucky wrote: »

who said that?

Erm, well if it helps. Me.

DervProf

Orpheo wrote: »

That's all you lot will be able to afford by they time I retire (with my rather large pension).

Really2

Graham_Devon wrote: »

Tells me no matter what the BOE run around targetting, they can't reduce rates any further (not meaningful reductions anyway) and the UK housing market can only just about survive as we are, indeed, it's not really surviving at the moment as prices are falling.

How are the BOE going to "target" anything now? More QE?

We've targetted as much as we can. We now are just sitting waiting, with our pants around our ankles hoping nothing else goes wrong.

If you could tell me what else the BOE could do, I'd be interested in that debate.

Carry on as is and support growth policy as much as possible. (who said anything about dropping rates?)

Welcome to the world of recessions.

PS The pants bit did make me feel a bit ill, could I request that you don't carry on with the idea having your pants down may help.

Pps Why has inflation got on to house prices? I never said anything about it?

DervProf

If the BoE hadn't turned a blind eye to the boom in credit and HPI in the mid 00's, then maybe they'd now had some "wriggle room" to play with. In fact, maybe the taxpayer wouldn't now be owed £billions by the banks, and property sales wouldn't have fallen so low.

lemonjelly

Really2 wrote: »

What does that tell you? will they target the economy or commodity inflation they have little control over?

I like how people say the BOE will be forced to deal with the inflation?

The key things are that current inflation is not being caused by things which can be affected by the BoE's policies/remit. The VAT rise hasn't helped at all, however. I'm not convinced that inflation will plummet like some believe in 2012 because from that point VAT will be stripped out of the figures. I think it'll come down a little, but only marginally.

Food and fuel and energy costs are the drivers (;)) at the moment. The risk is that these affect pretty much everyone. But the poorest are hit the hardest. Oh, & lets not forget the poor pensioners with all their savings!

With the anticipated rest of the electric/gas providers price increases, and the ongoing issues with food costs, I cannot see inflation falling to anywhere near the 2% target.

Graham_Devon wrote: »

How are the BOE going to "target" anything now? More QE?

We've targetted as much as we can. We now are just sitting waiting, with our pants around our ankles hoping nothing else goes wrong.

If you could tell me what else the BOE could do, I'd be interested in that debate.

QE is NOT going to reduce inflation.

I think the issue is that many have heard that current inflation is temporary, however that "temporary" is dragging out a lot longer than even Merv believed when he made those statements. I do feel that inflation will crawl down, it won't suddenly drop, so it'll be around its current mark for a while. Even when IR's do start to rise (not that I feel the initial rises will have any effect on inflation).

The fact that it was banged on about as "temporary" which most people assumed meant very short term - not necessarily what Merv meant, but he allowed people to believe that anyway - or the blip is lasting longer than even he/the BoE thought. Many laypeople are therefore losing confidence in what the BoE says.

Of course, they may have not anticipated food & fuel inflation being as significant as they are.

We're hurting because they are essentials that we're all exposed to. Retail figures are showing that most of us are cutting back on all other forms of expenditure. This stuff, we have less choice.

Graham_Devon

Really2 wrote: »

Carry on as is and support growth policy as much as possible. (who said anything about dropping rates?)

Ok, to cut 15 pages from the discussion.

You quoted me, asking me what my post tells me, and asking me what they will target. You included something about a loaf of bread, in relation to my post of the US and Greece being in trouble. I'm not sure what the loaf of bread had to do with it really, but there we go.

I have then asked you what the BOE CAN target. Personally i don't believe they can target anything specifically at the moment, with any meaningful policy to stimulate whatever they are targetting (whether that be growth, jobs, houses, loaves of bread). I believe we have emptied the cupboards, and have little in the way of manouvre and new, active stimulus.

You've replied, not answering my question, but just stating they will continue as they are. I assume you mean keep base rates low, ignore inflation, no more QE.

I talked about dropping rates, because in my mind, targetting something, means actually doing something. Changing base rates is normally a way of targetting something. Just doing nothing, isn't really "targetting". But that definition in itself is open to debate. So for clarification, I'm talking about specific stimulus to target a specific problem (in this case, problems in the US and Greece).

- QE would increase inflation.
- Just spending more isn't really possible. We'd be following the route of the US. Didn't really help them.
- Interest rates, we can drop them 0.5%, but not sure what that's going to achieve.

So what can we do to target something if the US wobbles and causes another downturn?

And just so that we are clear, I'm talking actively target something.

I'm open to debate on this one, as I think it's an interesting debate to be had. I won't twist anything you say, and hopefully you could do the same, and a proper debate could be had, which would be nice!!