Inflation now 3.1% ... ie up 0.3%... Base Rate follow?

Mr_Mumble

Can't see 0.5% happening in May. Perhaps for the sake of the economy it should happen but the BoE seem more interested in not popping the property bubble than keeping inflation under control.

All of the 43 economists surveyed by Bloomberg News yesterday expect policy makers to lift the Bank Rate to 5.5 percent next month. On March 30, nine out of 53 economists had expected no change in April or May. A report yesterday showed inflation last month at the fastest pace in a decade.

http://www.bloomberg.com/apps/news?pid=20601102&sid=aEuOnI84rE5Y&refer=uk

RayWolfe

Ah but! 49 of 50 economists did not predict the January rise.
I suspect however that the wage inflation announced today will have a bigger effect than the inflation figures which we know is a blip.

ManAtHome

100% of Men at Home didn't predict that "Danny" would would vote for a hold in April..!! The 0.5% bet may not be that crazy (well, yes it probably would be - BoE have only ever moved 0.5% in a downwards direction).

ED

Fixed Rate mortgages being rapidly withdrawn this week by many lenders may signify widespread expectation of more than a quarter-point rise in Base Rate. Or can anyone think of another reason?

Also, is it likely building societies + banks may need to make savings rates extra attractive, to bring in sufficient funds to lend to more reluctant mortgage borrowers as Base Rate heads towards the mooted year-end 6%?

ManAtHome

Fixed rates are more likely impacted by the Chinese getting closer to raising rates and maybe the Japanese following suit. Long-term rates often move independently of BoE short-term rates as most of the cash is sourced outside the UK.

ps - (ED) think you meant more than a quarter-point hike (not drop) in rates - or are you really "Danny" and should I claim my fifty quid..?

McSaver

i think the MPC will be stubborn enough just to raise by the quarter point, they probably really want a no change but cant really do that.

free4440273

...no doubt about that - they're gutless. they do not really have a clue what they're doing. they could have nipped this (inflation, rising house prices et al) in the bud ages ago; they chose deliberately not to. now comes the reckoning...all the signs are now pointing to a massive correction in property and the stock market. the fact that the markets quivered this week on data showing just how strong the Chinese economy is, is not only telling it's worrying. hope everyone has a good Monday week - rain at last.