Monday, Jun 11, 2007
Swervin' Mervyn knows the game's up
Reuters: BoE's King warns rates may need to go up
Interest rates may need to rise again if signs of price pressures and capacity constraints stay high, Bank of England Governor Mervyn King said on Monday. He warned Britons it would be unwise to borrow so much that repayments are only affordable at initial levels.
Posted by little professor @ 10:11 PM (315 views) Add Comment
11 Comments
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1. Whiteknight said...
.. but he is still talking instead of doing.
I grow weary of his voice.
2. Pr said...
"While he noted that average earnings growth had so far been subdued, King said the Monetary Policy Committee was puzzled by the divergence in the two official measures of pay growth and was awaiting an explanation".
This sounds interesting. King seems to be suggesting that one measure is showing second round wage led inflation, whilst another is not. Can somebody please explain these two measures and give an insight into what this could mean? Its good that King is finally giving an insight into the measures that are of most concern, gives us something to monitor.
3. confused76 said...
I found this comment of a reader of the Times and wanted to share it with you... without any further comment...
http://business.timesonline.co.uk/tol/business/economics/article1828500.ece
I think the B of E is right to be cautious about rate increases. After all there is no guarantee that the economy can withstand a rate of more than 1% in real terms ( if measured against RPI. )
The increases to date are already having an effect. Why, only the other day I was talking to our postman about his portfolio of buy to let properties, and he is becoming much more cautious. At the beginning of the year he was forecasting capital growth of 20%, but his expectation is now only for 12% to 15%. Not only that, but he usually increases his borrowings for reinvestment at the end of each year by 80% of the value increase but he intends to restrict this to only 60% this time.
I cannot understand the recent criticism of the Bank on grounds of lack of transparency and clarity. Over the the past couple of years it has always been very clear to me what the MPC has been aiming to do, and the scale and timing of rate movements have come as no surprise to me whatsoever.
J. Mackay, London
4. confused76 said...
news about King's speech is also in the times
http://business.timesonline.co.uk/tol/business/money/mortgages/article1917501.ece
5. Orwell said...
No wonder the posties are on strike then!
6. paul said...
I think we're all growing a bit weary of The King Of Wishful Thinking continually trotting out the same cautions but then glibly proclaiming "steady as she goes, no change" whenever rate decisions come about.
This is known as good old fashioned complacency. That and statistical incompetence because by chopping and changing their measures to fit their projections, they've missed key factors in the economy.
I'm not sure if that quote from the Times is meant to be a joke, but it says it all really.
7. tyrellcorporation said...
Twin track UK employment market I think. Huge swathes of the population are having to shoulder unprecedented downward pressure on wages from mostly immigration and the upper echalons just getting richer and richer as a cronic skills gap forces wages ever higher. This partially explains why the top end of the housing market has detached itself from reality.
8. harold said...
Ah, the rich get richer and the poor get poorer.
We need this guy in the UK:
http://www.ronpaul2008.com/
9. Skint Academic said...
Postman with a portfolio of properties? SHOE SHINE BOY ALERT!!!
I regard any warning by the King about excessive borrowing as a prelude to a further rate rise. He's basically telling us in so many words that rates will increase I reckon.
10. nopensionnohouse said...
"Another reason is that cheap credit and banks' increasing willingness to provide finance has boosted spending. "Obvious though the point may seem, it is unwise to borrow so much that the repayments are affordable only if interest rates remain at their initial levels," he said"
Eyes roll skywards... Yawn. What a guy.
11. Utterlee said...
"Ah, the rich get richer and the poor get poorer.
We need this guy in the UK:
http://www.ronpaul2008.com/"
Not quite sure how a hard right guy like that would stop the poor getting poorer and rich getting richer. Probably would speed up the process.