Inflation will rise faster than expected

Eellogofusciouhipoppokunu

JonnyBravo wrote: »

Well more broad brush strokes and I'd like to be noted as an exception once again.
I took a fixed rate offset for 10 years over 4 years ago from FD. A poor decision (so far) it turns out as the flexible offset would have saved me money (so far).
Not terrible though as it used for BTL purposes so at least it saves me paying so much tax.
It is at times entirely offest and at others only minimally as the money is used to trade/invest in shares.

People often forget when their fixed rate is higher than variable mortgages, that the primary reason for getting a fix is security. Security of knowing exactly what they will pay for their accommodation for the term of the fix.

Saying that, with the current market leading 10 year fix at 4.58%, it's difficult to see how you'd lose out financially over a 10 year period.

JonnyBravo

Eellogofusciouhipoppokunu wrote: »

People often forget when their fixed rate is higher than variable mortgages, that the primary reason for getting a fix is security. Security of knowing exactly what they will pay for their accommodation for the term of the fix.

Saying that, with the current market leading 10 year fix at 4.58%, it's difficult to see how you'd lose out financially over a 10 year period.

Absolutely and that is of course the chief reason we took that mortgage then. Since then our finances have changed immeasurably and ultimately we could always pay 2% to escape.

Thrugelmir

CLAPTON wrote: »

the reason that people say inflation is a solution to debt is because historically price inflation has been closely related to wage inflation.

Wage inflation on the whole exceeded price inflation.

This was down to productivity improvements ( i.e. technology).

Still remember getting a 21% pay rise when inflation was 18.5%. That was the time to be geared up with debt.

There's no apparent productivity gains in the wider economy currently. So hard to see real wage rises for many.

CLAPTON

Thrugelmir wrote: »

Wage inflation on the whole exceeded price inflation.

This was down to productivity improvements ( i.e. technology).

Still remember getting a 21% pay rise when inflation was 18.5%. That was the time to be geared up with debt.

There's no apparent productivity gains in the wider economy currently. So hard to see real wage rises for many.

indeed so
for the 50 years before the financial meltdown wages rose abour 2-3% pa more than prices.

however, as far as debt being eroded by inflation, the important factor in wage inflation rather than price inflation or real increase in productivity

pqrdef

Wages up 1.8% last year.

Merv now says price inflation will start to come down again in the 2nd half of 2013.

GDP growth forecast for 2013 reduced to around 1%. Last quarter was a flash in the pan - at last something to blame on the Olympics.

Recovery now "slow and protracted".

Graham_Devon

That bloke from the BOE never resigned....

wotsthat

Graham_Devon wrote: »

That bloke from the BOE never resigned....

I remember seeing an article about this. Are there any real quotes attributable to him where he says that if inflation isn't x% by a specified date then he'd resign?

I thought he said he said he wouldn't seek re-election to the MPC rather than resign.

If he's made a clear statement I don't mind sending him a letter reminding him of his commitment. Suggest you too if you're really bothered.

Graham_Devon

wotsthat wrote: »

I remember seeing an article about this. Are there any real quotes attributable to him where he says that if inflation isn't x% by a specified date then he'd resign?

I thought he said he said he wouldn't seek re-election to the MPC rather than resign.

If he's made a clear statement I don't mind sending him a letter reminding him of his commitment. Suggest you too if you're really bothered.

No, you are right. He said he wouldn't seek a second term.

And to be fair to him, he hasn't done and is now gone. Inflation was supposed to be well below target by now, and he talked of sleepless nights worrying about his participation in increased inflation.

poppy10_2

pqrdef wrote: »

Merv now says price inflation will start to come down again in the 2nd half of 2013.

Merv's been saying the same thig since 2007.
"This time next year we'll be millionaires" :j

wotsthat

Graham_Devon wrote: »

No, you are right. He said he wouldn't seek a second term.

And to be fair to him, he hasn't done and is now gone. Inflation was supposed to be well below target by now, and he talked of sleepless nights worrying about his participation in increased inflation.

Years of low inflation and he's losing sleep about the difference between inflation of what? 2% and 2.5%?

Not sure he was dealing with the pressure very well by the sounds of it. Perhaps he was deluding himself by thinking he could fine tune inflation.