Friday, May 16, 2008
Utterly twisted logic!
BBC: CPI target to 'crucify' consumers
Consumers will be "crucified" unless the government changes its inflation target, a leading economist has warned.
Peter Spencer from the influential Ernst & Young Item Club is urging ministers to change the 2% inflation target used by the Bank of England. He warned that interest rates would have to stay at 5% if inflation is to be brought down to 2%.
He added that keeping interest rates at their current level would hurt hard-pressed households.
With annual inflation at 3%, the Bank has little room to cut borrowing.
March's 0.8% monthly rise in consumer prices was the steepest for nearly seven years. He called for the Bank of England's remit to change so it focused on "core inflation", a measure that excludes food and energy prices and is used in the US.
9 Comments
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1. bystander said...
"Its forecasts are independent of any political, economic or business bias, providing an impartial benchmark for other private and public economic forecasts. Ernst & Young’s sole sponsorship of the ITEM Club helps meet our clients’ needs for objective economic forecasts in their business planning. " Taken from the Ernst & Young web site.
"independent of any political, economic or business bias", "helps meet our clients’ needs". How can this 'club' be independent and impartial, a bit like AMBAC, standards and poor etc being impartial when awarding AAA ratings for their 'clients'. Another example of VI' wrapped up in concern for the general public. GB must be happy as can be, gives him the opportunity, with endorsements from another 'expert' to chnage the inflation target and drop rates and devalue the pound and enter the Euro etc. etc. I only hope the general public are wise to this and won't allow such short sighted stupidity to happen. Bet Professor Spencer appears on the BBC news tonight.
2. jonb said...
Well either mortgages go up, or food and other things go up. What's it to be?
3. Collywolly said...
So whats the point in having a target of 2%, if it gets changed as soon as it becomes difficult to achieve? Might as well have no target at all.
4. little professor said...
Yes, Peter Spencer. So let's keep interest rates down and allow inflation to take off. That will be much better for consumers.
What an idiot.
5. Slysmiles said...
This article is crazy. The guy is suggesting because we have 3% on CPI (doctored as hell already), we can't cut rates. So to allow rate cuts, and all the associated problems, he propose to go to a new Index to have a smaller number ! Pure delusion.
6. malct said...
would it help to take some pressure off this evolving website if admin created at system whereby posters could communicate one 2 one but still annon?
just a thought.
7. it_is_going_with_a_bang said...
Create a measure which ignores anything worth taking note of. I dont really see how the economy of the US has benefited from this either? Maybe he would like to explain?
8. Bangybongo said...
i spent a while worrying about the BoE including house prices in the inflation target (i.e. cheeky excuse to lower interest rates). but targets are unimportant. you can fiddle with your measures as much as you like, but the truth looms and must be addressed. as an aside, i detect that merv.' got bullied into allowing northern rock to live and now that he's got another term as The Guv'nor, he's going to be a relatively mean one. his comments in the last inflation report were witheringly honest. here's raising a glass to you for that, murvin.
9. the haunted said...
Is Peter Spencer retarded? How can increasing costs for life's necessaties through rampant inflation possibly be a better option than keeping interesst rates where they are? Peter Spencer from the influential Ernst & Young = Tool.