Tuesday, Sep 18, 2007
Another Rate Cut on the cards, HPI about to increase again...
Reuters: Falling inflation creates window for rate cut
Inflation unexpectedly fell to 1.8 percent, its lowest in more than a year in August, giving the Bank of England room to cut borrowing costs if the credit crisis deepens. Only last month markets were gambling that interest rates would need to rise again this year, but a global credit squeeze has put paid to that hawkish outlook and woes at mortgage bank Northern Rock have raised hopes of an imminent rate cut.
Posted by jj @ 01:05 PM (384 views) Add Comment
5 Comments
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1. tyrellcorporation said...
Typically hair-brained appraisal by Reuters. Heck why not just slash IRs because an over-leveraged bank is having a spot of bother - laughable!
2. planning4acrash said...
OK, we all know that a manipulated low CPI is good for low interest rates in the short-term. But we also know that RPI is used for wage bargaining. It therefore stands to reason that, if the gap between CPI and RPI reaches a particular given level, or if RPI is above a certain point for enough time, that we get second round inflation with above inflation pay-rises and eventually even that will have to be shown in CPI figures. Anybody know how long the Chancellor can hold out? How long until we see a rapid rise in rates like we did in the 1990's?
3. mrmickey said...
I think the Chancellor could hold out for quiet some time, you have to remember that a good number of the population are brainwashed by the media and are just compliant sheep with no sense of self preservation and are quiet happy to be shafted by the government. The British attitude of go along to get along works very well in the governments favour, it always amazes me at how badly the rail companies treat their customers and get away with it, any other country and there would be riots up and down the rail system, the rail companies treat people like cattle but they behave like cattle.
4. enuii said...
This is a fluke statistic of the sort that is generally removed from statistics, August witnessed a price war between the supermarkets and the strongest level of the pound in living memory against the dollar etc. Septembers and Octobers figures will be much more interesting and the powers that be know that so I presume rates will be on hold again because there is no room for manouevre up or down without making things even worse.
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