Tuesday, Apr 17, 2007
Don't bank on a rate rise yet! He's Swervin like mad!
Reuters: BoE's King-CPI pushed up by fuel in March, will fall back soon
An unexpectedly sharp rise in petrol and food costs propelled inflation in March, but it will fall back within months, Bank of England Governor Mervyn King said on Tuesday in a letter to the government explaining the surge in prices.
Posted by tyrellcorporation @ 11:41 AM (160 views) Add Comment
20 Comments
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1. royston said...
Gosh, I wonder if my boss would be so understanding if I missed my job targets by over 50%.
2. Matt said...
Isn't most oil bought in USD. In which case a strong pound should benefit us in terms of getting more oil for our sterling? Or am I wrong. In which case, I'm not sure quite what Merv is saying. But it is clear if the pound were to fall even gently, the upward pressure on prices would be significant. So they have to raise rates surely, if they don't at least meet currency speculators expectations then the pound will begin to be sold, the resulting inflation means they'd have to put rates up in a reactionary move . . . hvae I answered my own question with regard to the "forward-thinking" poilicies???!
3. Lem said...
Dear Gordan
Inflation has gone above 3.0% because prices have gone up
Love Merv
4. dohousescrashinthewoods said...
Protect the asset bubble at all costs.
5. Chiswickian said...
So that's it ? That's all we were looking forward to ? What a disappointment. Mervyn made some very weak excuses and said it would fix itself in a matter of months and Brown said "hey no worries, you're doing just fine" (not ver batum!). No wrapped knuckles, no reprimand whatsoever. Why on earth should the MPC be overly concerned if this the worst they get for completely losing control of inflation ?
I despair. Am I alone on this one ?
6. Sam said...
yeah, protect at all costs, at least till gordo gets in. -- although perhaps gordon will have worked out he's finished and the sweet justice of Blair and his crazy wife have a lot to loose when property prices tumble.
actually perhaps that's what he's waiting for?? - the more bigger the crash the more it's gonna hurt blair.
7. p. o. o. r said...
OK - I agree it might fall back to maybe 2.8 or 2.9, then bounce forward again to 3.3+++ then what! Act now - put rates up before it's too late. I feel it's like driving a car at 100MPH towards a brick wall and deciding when to apply the brakes - do you do it before you hit the wall? or allow the wall to stop the car & hope the damage is not too bad, knowing that this could be the fatal option.
8. Maggot said...
great ,hurricane and driving seasons to come ,also a few strikes look more probable.at some point intrest rates will have to go up.the longer they are left the quiker the rate of rise when they do happen.the greater the crash..........please mr king leave intrest rates alone in may ,so we can benefit from your economic disaster.
9. Scott said...
I expect the house price crash to start in the next 6 months. Otherwise, I will have to quit my high paid job in the city and become a rent boy. Apparently the money is good but a lot of people who do it get shafted.
10. Pete Huxley said...
The governor has recently developed a habit for prediction which he has previously sensibly avoided. When dealing with a system as chaotic and unpredictable as the economy it would be prudent to err on the side of caution.
Also, the very gentle increases in interest rates we have seen over the past 8 months have probably increased inflationary pressure rather than reduced it.
11. royston said...
Why are Mervyn et al. so convinced that oil prices will drop later in the year? The short term data suggests the oil price is rising. The long term view is that it is a finite resource that we are steadily running out of - North sea oil is all but gone, the US has very little of its own supply left. Our main supplies nowadays come from a war zone. Why this medium term view that oil prices will decline? What am I missing?
12. Mr Smith said...
Titanic2 - mr brown's in a fix and it's getting harder. When he becomes boss he can kick himself.
13. This comment has been removed as it was found to be in breach of our Blog Policies.
14. mrmickey said...
Royston, Merv is convinced oil prices will drop because you don't need as much of the black stuff after your economy has crashed.
15. george monsoon said...
I think Mervyn must be looking into his crystal ball, because there is no clear indication that oil prices or public spending is going to let up anytime soon. What a cop out!
So thats it then, if he is expecting inflation to drop, there will be no rate rises any time soon. I tend to think that the boot of market forces will give him a firm whack up the jacksie before summer is out. controlling inflation is like stopping a motorbike falling. If you catch it just as it starts to go, then you can stop it with minimal effort, but once it starts to go over properly, there is no way you can prevent it hitting the ground..
Good old Labour.. and I tried to convince my tory dad that the days of socialist spending and inflation were long gone.
I stand corrected.!!
16. Scott said...
Royston. Perhaps he know oil prices will drop because he knows we are going to invade Iran.
17. Shipbuilder said...
This just shows that there's only so much fiddling can be done before the true picture emerges.
What is truly incredible is that they are still coming out with the 'inflation will fall back this year' nonsense, becuase utility bills are being cut? Are utility bills worth 1% of CPI? We have heard a steady stream of inflationary news since the start of the year, yet 'experts' claim that disinflationary forces are already taking effect.
No doubt by the end of today some will again be trumpeting the mythical IR 'peak' then cut before year end, to calm housebuyer's nerves.
Did anyone read Mervyn's letter on the BBC? Laughable.
18. george monsoon said...
Just to add. The government seems to care nothing for the long term state of the country, but seem to take the stance "keep the public feeling good and spending and we are alright Jack" Mervyn and his partners in crime are all hand picked by Gordon. Independant my arse.
19. Ticktock said...
Good old Labour.. and I tried to convince my tory dad that the days of socialist spending and inflation were long gone
'New' Labour are not Socialists, they are Capitalists. Polar opposites in fact. Funny that the UKs idea of 'socialism' should be nothing more than it being an inefficient type of capitalism!! No political party rules this Country, Capitalists do (and mostly foreign ones at that). It makes me laugh to read all the umming and arghing about who will win the election as if we lived in a real democracy!!!
Please don't get mixed up like this. Socialists are ant-capitalist (and that means anti-New Labour too!)
20. p. o. o. r said...
Pete Huxley - (sorry this is not regarding the posting) are you any relation to Aldous / Thomas Henry Huxley?