Almost there! Unemployment hits 7.1%

pbouk

HAMISH_MCTAVISH wrote: »

Miserable time to be a housing bear.

The restoration of at least partial functionality to the lending markets has resulted in a significant rise in both house prices and volume of housing sales over the last 12 months.

The wealth effect has kicked in, consumer confidence has risen, and resulted in increased economic activity across the wider economy.

GDP is rising, unemployment is falling rapidly, and soon enough we should see wage rises and increased business investment coming to the party as well.

At which point the economic benefits of rising house prices will be seared into the minds of every politician for a generation.

The fact is that when the rate rises, which it will do earlier than planned, it will not matter regarding unemployment or wage rises because the grain of fear will be planted in the minds of the many. This will pull the reins back on the housing market.

TheFactory

AndyGuil wrote: »

Inflation at 2% and looking forward there are deflationary pressures. Rates won't be touched.

Correct. I can't understand why people are so focused on the employment figures like there are no other factors that effect the economy. An interest rate rise would put pressure on inflation which they do not want.

TheFactory

pbouk wrote: »

The fact is that when the rate rises, which it will do earlier than planned, it will not matter regarding unemployment or wage rises because the grain of fear will be planted in the minds of the many. This will pull the reins back on the housing market.

That won't happen either, much needed wage inflation will ensure that prices continue rising. With the obvious exception of London, housing in general is already undervalued.

quantic

It would be an absolute disaster to raise rates just when things are beginning to get on track, I don't think he ever actually said he was going to raise rates (not that he can anyways) he said that they would not begin to discuss raising rates until they approached 7%.

wotsthat

Graham_Devon wrote: »

Though like investors, I'm not sure Osbourne will be too comfortable with the figures today either. In public, sure, he'll be grinning from ear to ear. But he knows what the investors know....each bit of goodf news means less chance of further stimulus and support.

It's one for the desperation index if you think Osborne will be upset because he wants more stimulus and support. The economy is improving - get over it.

The problem he has is that the Tories want to reduce the size of government. Difficult to justify cuts in the world's fastest growing developed economy - just wait for the shrill cries that the improving economy is benefiting the haves rather than have nots. You're already getting high pitched about this when there's still a £100bn deficit to sort.

michaels

wotsthat wrote: »

It's one for the desperation index if you think Osborne will be upset because he wants more stimulus and support. The economy is improving - get over it.

The problem he has is that the Tories want to reduce the size of government. Difficult to justify cuts in the world's fastest growing developed economy - just wait for the shrill cries that the improving economy is benefiting the haves rather than have nots. You're already getting high pitched about this when there's still a £100bn deficit to sort.

Nail on the head there.

Remember when Clown was chancellor and he kept redefining where the UK was in terms of the business cycle to try and justify running a deficit at the height of a boom. Given this sort of form you can be certain that if there is a closure in the defict due to an improved cyclical position even if the underlying deficit is unchanged Ed and Ed will be clamouring for the 'fruits' of growth to be shared more widely via increased govt spending.

Tancred

michaels wrote: »

I thought he said it wouldn't go up before unemployemnt fell to 7% which is not the same thing at all unless you are in the media it seems.

Definitely good news for all those with jobs who didn't have before but what would be good would be to see that translate in to a sharply falling deficit.

I don't believe the rate will go up by much, if at all, before the 2015 general election - the government won't allow it. Osborne will have issued clear orders to the BoE not to allow the rate to rise except by a small margin. I would bet that the interest rate will not be higher than 1% in 2015.

Tancred

quantic wrote: »

It would be an absolute disaster to raise rates just when things are beginning to get on track, I don't think he ever actually said he was going to raise rates (not that he can anyways) he said that they would not begin to discuss raising rates until they approached 7%.

Nonsense. Rates would still be very low by any historical measure even if they went up to 1% or even 1.5%.

Tancred

MrRee wrote: »

And we won't see a 5% base rate again in our lifetimes.

Of that there is no doubt whatsoever.

Again, nonsense! Unless you are already 80+. :rotfl:

cepheus

Why Interest rates won't rise according to Jeremy Cook


Firstly, the Bank of England has been eager, in these minutes, to emphasise that productivity growth has been ‘disappointing’. Ben Broadbent, an MPC member, spoke last Friday and warned that ‘a failure of productivity to respond to stronger demand’ could easily see the recovery falter. More people have jobs, that can only be a good thing, but the economy will not strengthen in the long-term if productivity levels don’t recover too.
The second reason is wages. Despite the increases in jobs, take-home pay is still in the doldrums. Pressure has been building on wages, with inflation running above pay increases since May 2010.

We are still waiting for the 3 month average increase to get back above 1.0 per cent(currently it sits at 0.9 per cent) let alone the current inflation reading of 2.0 per cent. Interest rate hikes are unlikely to be popular in a climate of falling real wages and further pressurised wage packets, as mortgage payments for those on variable deals inch higher.
Lastly, we need to take a look at the value of our currency, the (not so) humble pound. The Bank of England has expressed concerns about the run higher in the value of sterling. A move to increase interest rates would be a shot in the arm for an already overvalued currency.

Read more: http://www.thisismoney.co.uk/money/comment/article-2544001/Opinion-There-three-good-reasons-rates-wont-going-just-yet.html#ixzz2r9GKyjTB