Interest rates may rise this year

Glen_Clark

Tammer wrote: »

Interestingly the news reported today inflation falling to 1.5% .

...with London house prices rising at 17%.
Anyone who reports the Governments inflation (or employment) statistics with a straight face either has an agenda, or is being fooled.

ColdIron

Glen_Clark wrote: »

...with London house prices rising at 17%.

That 1.5% is CPI which does not include housing

guymo

ColdIron wrote: »

That 1.5% is CPI which does not include housing

I think that was Glen's point.

ColdIron

guymo wrote: »

I think that was Glen's point.

Perhaps you're right but I read it as disputing the inflation figure on the premise that house prices were rising at a far higher rate

bigadaj

ColdIron wrote: »

Perhaps you're right but I read it as disputing the inflation figure on the premise that house prices were rising at a far higher rate

As with virtually any economic statistic you can guarantee that your personal inflation rate won't match that published, however I'd agreed with glen in that excluding housing from inflation isn't realistic when that is the largest single cost for the majority of the population.

It might not have a direct effect on industry or some parts of business but it's still disingenuous.

Tammer

We have to make sure that raising interest rates is the answer to the problem.

For example, when people were calling for interest rates to rise 2 years ago, that was a mistake because it was not excess consumer demand that was causing prices to rise (it was rising global commodity prices principally). Luckily, BOE did not raise rates then.

Now we have the problem of excessive house price growth in London. I don't think that the same growth is seen elsewhere in the UK? However, do we know what is driving the growth? Is it average UK punters with too much cash? Or is it cash buyers, many of them foreign, stoking up a safe haven?

If it is the latter, then raising interest rates would be akin to using a hammer to loosen some screws(?)

surfsister

from the telgraph

An early rise in interest rates could put the economic recovery in jeopardy, Vince Cable warned on Wednesday.
The Business Secretary cautioned the Bank of England against increasing rates solely to cool the booming housing market.
He made his remarks after the Bank’s Monetary Policy Committee gave another signal that rates could start rising earlier than many economists had expected.

no idea if he's right!

talexuser

Why can't we have two interest rates, one for bank loans and one for domestic property? I can't see many people getting away with a bank loan of several hundred thousand to blag a cheaper rate for a house, and maybe it could give the authorities a means of cooling housing inflation without strangling business investment?

Glen_Clark

Tammer wrote: »

However, do we know what is driving the growth? Is it average UK punters with too much cash? Or is it cash buyers, many of them foreign, stoking up a safe haven?

They must think house prices are going to rise further - and the Government is giving them every encouragement to think so. Although trying to placate critics with words about cooling the housing market, Osborne and his overpaid puppet Carney continue to use every tool at their disposal to pour petrol on the fire - even to the point of guaranteeing sub prime mortgages with taxpayers borrowed money.

bigadaj

talexuser wrote: »

Why can't we have two interest rates, one for bank loans and one for domestic property? I can't see many people getting away with a bank loan of several hundred thousand to blag a cheaper rate for a house, and maybe it could give the authorities a means of cooling housing inflation without strangling business investment?

Well in some ways this has already happened hasn't it with the modification to funding for lending, now that has been withdrawn for mortgages but remains for business lending.