Inflation Soars....

Generali

....to 0.1%.

Probably no need for an emergency MPC meeting this month.

The Consumer Prices Index (CPI) – which measures these changes – shows that prices increased by 0.1% in the year to November 2015. This means that a basket of shopping that cost £100.00 a year ago would cost £100.10 now.

http://www.ons.gov.uk/ons/dcp171780_427182.pdf

I still reckon that interest rates will be going up pretty soon, assuming the Fed continues tightening into 2016. Base rates to be neutral should be ~2% at the moment.

michaels

I was going to do a thread with a poll on what base and long rates 'should' be in real terms.

Looks like the black Friday reductions were less generous this year, hence people staying out of the shops then but there seem to be more reductions than normal in December and I suspects the sales are going to be generous. I would be surprised if we are not negative again come December's numbers.

In terms of what is normal I think we should not ignore the Japanese exampel and also ask whether demographics may mean that the new normal real base rate is lower than the historic norm. (And is our experience from the 70s to the noughties really the 'norm' anyway?)

DiggerUK

There is a right hullabaloo developing, with an evangelical crowd fervently flailing themselves for central bank rates to rise.
No thought has been given, as to what the upshot of such a move would be.

It doesn't take much to figure out that by raising rates they shoot themselves in one foot, and by lowering them, in the other foot..._

Generali

DiggerUK wrote: »

There is a right hullabaloo developing, with an evangelical crowd fervently flailing themselves for central bank rates to rise.
No thought has been given, as to what the upshot of such a move would be.

It doesn't take much to figure out that by raising rates they shoot themselves in one foot, and by lowering them, in the other foot..._

How do you flail yourself?

No matter. It seems nailed on that the Fed is going to raise rates on Wednesday. It's not when any more it's by how much will they raise. The general assumption is 25bps (0.25%) but I wouldn't be surprised to see less than that.

DiggerUK

No thought has been given to the consequences of action on rates.
As there are only three options, it shouldn't be that hard to estimate the ramifications.

What we have no insight into, is which option is going to be chosen.
The fed will not be taking that decision in a vacuum..._

CLAPTON

DiggerUK wrote: »

No thought has been given to the consequences of action on rates.
As there are only three options, it shouldn't be that hard to estimate the ramifications.

What we have no insight into, is which option is going to be chosen.
The fed will not be taking that decision in a vacuum..._

I'm sure your are right
not a moments thought has been given to the consequences of raising the interest rates

Thrugelmir

CLAPTON wrote: »

I'm sure your are right
not a moments thought has been given to the consequences of raising the interest rates

People will just take it in their stride. Providing the increments are small. Interest rates remaining low creates it's own set of problems.

DiggerUK

CLAPTON wrote: »

I'm sure your are right
not a moments thought has been given to the consequences of raising the interest rates

The fed will be very cognisant about what they are doing, on that I have no doubts.
They will only make a 'wise' decision if they achieve their intended goal and, just like a santa list, it may not all be delivered..._

CLAPTON

DiggerUK wrote: »

The fed will be very cognisant about what they are doing, on that I have no doubts.
They will only make a 'wise' decision if they achieve their intended goal and, just like a santa list, it may not all be delivered..._

that is true
the future is not always predicted correctly.
events sometimes happen

DiggerUK

CLAPTON wrote: »

that is true
the future is not always predicted correctly.
events sometimes happen

Events dear boy, events........rings a bell..._

Mistermeaner

Buy gold


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