MPC may raise Interest Rates to 6% in August!

Melissa177

Typical Scot

dougs

Melissa177 wrote: »

There was an 8-1 vote against a hike this time.

Are the minutes of the meeting out yet? I didn't think you got to know how the voting was split until the minutes were published

Melissa177

Hmm - I am sure I remember hearing somewhere it was 8-1... I can't find it on Bloomberg now - it was perhaps hearsay from some City friends.

free4440273

Melissa177 wrote: »

I doubt it.

There was an 8-1 vote against a hike this time. The inflation report out on the 8th Aug (MPC have already seen it) must have shown signs that inflation is cooling.

if inflation is cooling according to the BofE (when released) then their interpretation of temperature is markedly different from mine. basic food stuffs rising, oil still rising (give or take weekly differences in futures pricing), commodities still rising, house prices in some areas still rising. and if they do cut (and this applies also to the Fed) their credibility shattered and inflation and house prices on the up again. not that the BofE ever had any credibility.

Generali

free4440273 wrote: »

if inflation is cooling according to the BofE (when released) then their interpretation of temperature is markedly different from mine. basic food stuffs rising, oil still rising (give or take weekly differences in futures pricing), commodities still rising, house prices in some areas still rising. and if they do cut (and this applies also to the Fed) their credibility shattered and inflation and house prices on the up again. not that the BofE ever had any credibility.

Food prices rising - can be argued that this is a one-off exogenous shock caused by the weather and bio-fuel demand. If so, this isn't monetary inflation so if it hasn't caused an increase in inflationary expectataions can be ignored as it will just feed through as a one off change in reletive prices rather than an increase in the price level.

Oil/commodity prices rising - oil isn't increasing in price in sterling terms as far as I can tell Brent crude was trading at about $78pb a year ago, $76bp now. Cable has moved from £1=$1.91 to $2.04. I make it that the sterling oil price has fallen from £40.84pb a year ago to £37.25pb today, a fall of almost 9%. Annecdotally, I would say that petrol is a penny or so cheaper per litre than this time last year.

House prices - not rising for the majority I believe. Rents not rising either on the whole. Also house prices are not measured by CPI, the targeted inflation rate.

Imports - the pound is strong and rising so imported products should be lower in price than this time last year.

So some food price inflation, not that much else of the items you list free4440273. Food and non-alcoholic beverages make up 10.3% of the CPI basket. Only a tenth of any increase there feeds through into inflation as measured by CPI i.e. if food prices rise by 10%, the CPI rises by 1%.

I'd be interested to see where else you see inflation. The only place I see it is if the pound starts to fall in value so we import inflation. The credit squeeze should help force inflation out of the system too.

Melissa177

Watch out for Lauric oils. The massive price increases for coconut and palm kernel oil are only just feeding through into the chemical derivatives of these materials, and manufacturers are now feeling the hurt. Things like lubricants, shampoo, plastics, biodiesel (it's BD season by the way - production will soon run down for the year), detergents, pesticides etc etc are all going to go up in price.

Whether or not this is going to be passed onto the consumer is another thing.

Generali

Well the Fed didn't cut. Balls.

Melissa177

What did you wager? A couple of pounds?

That's less than a pint in the City after work...

Generali

Tenner on the Fed. GBQuid4 on the MPC.

ManAtHome

Ok, two pints in the City then...