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  • FIRST POST
    • MSE Guy
    • By MSE Guy 26th May 10, 10:18 AM
    • 1,628Posts
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    MSE Guy
    MSE News: Bank of England urged to raise interest rates
    • #1
    • 26th May 10, 10:18 AM
    MSE News: Bank of England urged to raise interest rates 26th May 10 at 10:18 AM
    This is the discussion thread for the following MSE News Story:

    "An economic report says the bank must increase borrowing costs sooner than planned to control inflation ..."

Page 1
    • dunstonh
    • By dunstonh 26th May 10, 10:36 AM
    • 98,299 Posts
    • 66,546 Thanks
    dunstonh
    • #2
    • 26th May 10, 10:36 AM
    • #2
    • 26th May 10, 10:36 AM
    Are you going to post alternative articles that say that deflation is just as likely?

    The problem with linking articles to speculation is that you are trying to predict the unpredictable. You won't get it right every time (probably not right most of the time) and will just come off looking silly when you get it wrong. For every economist or economic group that says one thing there are plenty of others saying something different.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Sceptic001
    • By Sceptic001 26th May 10, 10:49 AM
    • 1,099 Posts
    • 853 Thanks
    Sceptic001
    • #3
    • 26th May 10, 10:49 AM
    • #3
    • 26th May 10, 10:49 AM
    Are you going to post alternative articles that say that deflation is just as likely?
    Originally posted by dunstonh
    I am not aware of any economist who is saying that prices are going to fall anytime soon. The Bank of England is hoping that inflation (as measured by CPI) will fall back next year from its current rate of 3.7% to its target of 2%. Other economists are far more pessimistic.

    Of course stagflation (rising prices, stagnant economy) is a real possibility in current circumstances (falling pound, rising interest rates, rising taxes, high raw material costs etc.), but that is a whole different problem. The danger is that the government will see inflation as the easy way out of its debt problem, in which case savers are in for a bumpy ride.
    • mr_fishbulb
    • By mr_fishbulb 26th May 10, 10:54 AM
    • 5,067 Posts
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    mr_fishbulb
    • #4
    • 26th May 10, 10:54 AM
    • #4
    • 26th May 10, 10:54 AM
    The problem with linking articles to speculation is that you are trying to predict the unpredictable. You won't get it right every time (probably not right most of the time) and will just come off looking silly when you get it wrong. For every economist or economic group that says one thing there are plenty of others saying something different.
    Originally posted by dunstonh
    Now I know why I don't see you over on the house price board
  • CannyJock
    • #5
    • 26th May 10, 11:24 AM
    • #5
    • 26th May 10, 11:24 AM
    I'm really not convinced by the argument that the base rate is effective in controlling inflation. The notion that it increases the cost of borrowing which leaves people less money to spend is flawed when liquidity from the banks has been strangled and the price of things that consumers buy is determined more by importation costs, oil prices, taxation, duty and currency variances.

    I don't believe that increasing base rates will result in an effective downward pressure on prices to affect inflation. Reducing duty on imports and reducing duty on fuel will have a more direct effect on prices IMO.
    Last edited by CannyJock; 26-05-2010 at 11:26 AM.
    "A child of five could understand this. Fetch me a child of five." - Groucho Marx
    • Joe_Bloggs
    • By Joe_Bloggs 26th May 10, 11:40 AM
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    Joe_Bloggs
    • #6
    • 26th May 10, 11:40 AM
    • #6
    • 26th May 10, 11:40 AM
    @MSE Guy
    Is there any chance of you linking to a specific reference to the report in the article so that others could read it ? I can understand it if the original article is not available for direct public consumption.
    J_B.
    • StevieJ
    • By StevieJ 26th May 10, 11:49 AM
    • 19,537 Posts
    • 32,529 Thanks
    StevieJ
    • #7
    • 26th May 10, 11:49 AM
    • #7
    • 26th May 10, 11:49 AM
    I am not aware of any economist who is saying that prices are going to fall anytime soon. The Bank of England is hoping that inflation (as measured by CPI) will fall back next year from its current rate of 3.7% to its target of 2%. Other economists are far more pessimistic.
    Originally posted by Sceptic001
    MPC's Adam Posen warns Britain at risk of Japan-style deflation

    http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7760827/MPCs-Adam-Posen-warns-Britain-at-risk-of-Japan-style-deflation.html
    Government: "Should we get a pet?" 52%: "Yes" Government: "OK, we'll get a cat" 1/2 of 52%: "Oh no, I hate cats. I wanted a dog."
    • dunstonh
    • By dunstonh 26th May 10, 12:10 PM
    • 98,299 Posts
    • 66,546 Thanks
    dunstonh
    • #8
    • 26th May 10, 12:10 PM
    • #8
    • 26th May 10, 12:10 PM
    That is actually one I read at the weekend as well. There were a couple elsewhere over the last week too.

    It highlights the two extremes that the media focuses on. In reality, 9 times out of ten (made up stat) it will be somewhere in between the extremes.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • StevieJ
    • By StevieJ 26th May 10, 12:26 PM
    • 19,537 Posts
    • 32,529 Thanks
    StevieJ
    • #9
    • 26th May 10, 12:26 PM
    • #9
    • 26th May 10, 12:26 PM
    That is actually one I read at the weekend as well. There were a couple elsewhere over the last week too.

    It highlights the two extremes that the media focuses on. In reality, 9 times out of ten (made up stat) it will be somewhere in between the extremes.
    Originally posted by dunstonh
    And from Generali thread on the other board, M4 money signaling deflation.

    http://forums.moneysavingexpert.com/showthread.php?t=2492463
    Government: "Should we get a pet?" 52%: "Yes" Government: "OK, we'll get a cat" 1/2 of 52%: "Oh no, I hate cats. I wanted a dog."
    • dunstonh
    • By dunstonh 26th May 10, 1:36 PM
    • 98,299 Posts
    • 66,546 Thanks
    dunstonh
    And from Generali thread on the other board, M4 money signaling deflation.

    http://forums.moneysavingexpert.com/showthread.php?t=2492463
    Originally posted by StevieJ
    Oh no. don't send me in there.

    BTW (thanks doesnt seem to be working for me today. I press it and the icon goes but the thanks doesnt appear)
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • neil324
    • By neil324 26th May 10, 1:50 PM
    • 451 Posts
    • 126 Thanks
    neil324
    Well with CPI @ 3.7% and Q1 2010 MOM inflation annualized about 6.5%

    You can wheel out all the experts you like.

    The only arguement for inflation to fall is another round of massive deleveraging, even then from a UK standpoint with where Sterling is and where it would likely go it would be muted.
  • Premier
    It [the OECD] is predicting economic expansion of 2.2% in the UK this year, rising to 2.6% next year, but says growth could stall in the second half as consumers come under pressure.
    ... so why not urge an increase in the cost of borrowing to 7x the current level to avoid all doubt?

    (where is that rolling eyes smiley when it is needed?)
    "Now to trolling as a concept. .... Personally, I've always found it a little sad that people choose to spend such a large proportion of their lives in this way but they do, and we have to deal with it." - MSE Forum Manager 6th July 2010
  • RadioAmateur
    IMO We are suffering this level of inflation due to the 200Billion of Quantative easing - and there is more to come! The tradition means of raising the Bank of England base rate as was the usual way of controlling inflation will not work, but the Bank of England will probably start on 6th June 2010 with a 0.25% increase. We are all in for a rough ride! We the people do not really know the real level of Debt this country in in!
    • MSE Martin
    • By MSE Martin 26th May 10, 5:47 PM
    • 8,115 Posts
    • 42,285 Thanks
    MSE Martin
    Hi just to say this article is Press Association one. That's a newswire we have a subscription to - which we use to supplement our own stories.

    It tends to be best for macro issues and covering the big stories everyone else is covering ratehr than our more specialist stuff.

    Unlike many we deliberately by-line them PA so you know they're not MSE - we hope y ou find them interesting, but the view point is not MSEs (and we don't have access to the further reports)
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.

    Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.

    Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 000
    • JamesU
    • By JamesU 26th May 10, 7:22 PM
    • 1,053 Posts
    • 834 Thanks
    JamesU
    Martin, is it possible to consider revising the way headlines for interest rates on the index linked certificates are being advertised on MSE? People are getting confused, purchasing for the wrong reasons, going to the post office and being told different, posting their frustrations on various threads etc. Not up to the usual high standard of clarity at the moment. Numerous threads with the same stories and confusion.

    JamesU
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