Wednesday, Apr 18, 2007
Could interest rates hit 6% this year?
MoneyWeek: The City's big wake-up call on inflation
We did say that the Bank of England should have raised interest rates this month - and we wonder if perhaps the Monetary Policy Committee is now wishing it had done just that.
Posted by mary @ 10:27 AM (155 views) Add Comment
2 Comments
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1. uncle tom said...
Well, you heard it here first!
I don't think our Merv would want to raise rates by 0.5% next month - it would smack of panic. 0.25% must surely be his preferred move, with another rise in June or July. However, his committee is a bit maverick at the moment - he might be outvoted.
As this article notes, the last three rate rises haven't achieved much. There may be a growing realisation that occasional little tweaks will not cure the problem.
Could the MPC find itself doing what the Fed did - and raise rates by 0.25% every meeting for several months?
It's very possible - the problem is that to curb inflation, it will be necessary to put a very large number of people on the path to financial calamity - I therefore expect to see the train driving the engine..
2. sold 2 rent 1 said...
A good article.
It explains how CPI will fall over the next 4 months but will rise again later in the year.
If the MPC don't raise rates enough now then inflation will be out the bag and much harder to tame later.
Merryn made a good recommendation in The Sunday Times this weekend
http://business.timesonline.co.uk/tol/business/money/funds/article1654128.ece
Bedlam Global fund.
"It has heavy holdings in two of my favourite areas — gold and Japanese property — and a record of delivering regular absolute returns"
Whilst GBP is strong - get your money into foreign/commodity investments.