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How long can the BoE keep rates from rising?

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Comments

  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    FTBFun wrote: »
    Just because the ECB chooses to raise rates to curb inflation doesn't mean the BOE needs to as well. We have different economic issues than [STRIKE]Germany[/STRIKE] the EU.

    Not really what I asked you to explain.
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Unfortunately Graham this is the major flaw with the single currency in that the big boys like Germany and France who's economies are in decent shape are calling the shots. Many of the fringe countries (the so called PIGS) are probably only going to suffer more from a rate rise now.

    While I'm no big fan of the really low interest rates as they do only really highlight a weak and shafted economy, I don't really see the benefit of raising them at the moment and that's nothing to do with housing it's regarding the economy in general. The UK is still at severe risk of going back into recession.

    Agree with most of that.

    However, what I don't agree with is the notion nothing can be done about any type of inflation. Especially when other nations are dealing with the very same inflation by doing the "impossible".

    Just look at our currency again today. Down against the entire world. This is our problem.
  • The_White_Horse
    The_White_Horse Posts: 3,315 Forumite
    if you discount everything that is rising, there is no inflation. that is the basis on which the boe works.

    it is like going to tesco, and they have put up the prices on 4000 goods, but reduced the price on one solitary item and then saying, if you exclude all the prices that have gone up, prices are going down.

    are they really? are they really?
  • RenovationMan
    RenovationMan Posts: 4,227 Forumite
    Agree with most of that.

    However, what I don't agree with is the notion nothing can be done about any type of inflation. Especially when other nations are dealing with the very same inflation by doing the "impossible".

    Just look at our currency again today. Down against the entire world. This is our problem.

    I've never seen a more lucid explanation that that given to you by shortchanged. You can't even dismiss him in your usual way because he is obviously not a bull. Instead you agree with him and then disregard what he has said. The ECB raised rates bacause the Germans and French economies are robust, our rates have not risen because our economy is not robust. If Spain, Portgual, Greece, Ireland, etc. could control their interest rates then they would not raise them either. Why is this concept so difficult for you to grasp?

    Out of interest, what sort of interest rate rise do you believe we would need to sufficiently raise our currency enough to make a difference to imported commodity prices?
  • HAMISH_MCTAVISH
    HAMISH_MCTAVISH Posts: 28,592 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Just look at our currency again today. Down against the entire world. This is our problem.

    That isn't a problem.

    If the intent is to rebalance the economy towards manufacturing and exporting, it's the solution. :cool:
    “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”
  • doire_2
    doire_2 Posts: 2,280 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Each week there is something to suggest they either will or wont.

    For instance last week it was reported that the deputy governor was prepared to vote for a rise and in doing so others would follow him
  • Turnbull2000
    Turnbull2000 Posts: 1,807 Forumite
    I'd say it'll be at least four or five more years before interest rates edge even close to inflation (assuming we don't get deflation). The BoE will be seeking a substantial paydown of household mortgage debt and house prices above and beyond 2007 peak in all regions in the meantime.

    So as per usual, rates on hold today with possibilty of further QE maybe hinted at again.
    Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    I don't dismiss him as he isn't wearing blinkers.

    Whereas it seems you are...Heres just one report from the first increase in EU rates...
    Euro zone inflation rose to 2.8% in April from 2.7% in March, according to a first estimate today from the European data agency, Eurostat.

    April was the fifth month in a row in which inflation was above the 2% target set by the European Central Bank. Economists say the data make an interest rate increase in June more likely.

    Euro zone inflation rose above that ceiling for the first time since late 2008 in December, hitting 2.2%, before rising to 2.3% in January and 2.4% in February.

    The faster than forecast acceleration, fuelled by a spike in energy costs as well as for raw materials, prompted the ECB this month to lift its benchmark interest rate to 1.25% for the first time in nearly three years.
    But yer, if you ignore all of that, and just say they did it because Germany and France are robust, then you can go back to saying there is no way of combatting any type of inflation, and all is good in blinker land once again!
  • bengasman
    bengasman Posts: 601 Forumite
    Explain to me why the EU has raised rates (and apparently is likely to do so again today) to deal with said inflation then please?
    They raise interest rates because that is the standing dogma. You would be surprised how many people in influential positions don't really understand how things work.
    A lot of people working for quangos and public sector are not very good at their jobs, which is often a reason why they can't get a job in the privates sector where results do count.
  • RenovationMan
    RenovationMan Posts: 4,227 Forumite
    I don't dismiss him as he isn't wearing blinkers.

    Whereas it seems you are...Heres just one report from the first increase in EU rates...


    But yer, if you ignore all of that, and just say they did it because Germany and France are robust, then you can go back to saying there is no way of combatting any type of inflation, and all is good in blinker land once again!

    Oh dear graham. You have to revert to nasty comments. I'll remind you of this when you do one of your 'don't shoot the messenger' style posts.
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