Wednesday, Feb 10, 2010
Inflation to rise - BOE is going to ignore it, because it isn't deflation
BBC: Bank of England warns inflation will exceed 3%
''The UK's inflation rate will rise above 3% in the coming weeks, the governor of the Bank of England, Mervyn King, has predicted. Presenting the Bank's quarterly inflation report, Mr King said the increase in VAT and higher petrol costs would push up prices.''
Posted by hpwatcher @ 12:18 PM (1609 views) Add Comment
23 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. matt_the_hat said...
We need a bit more than real interest rates of -2.5% to get rid of the UK debt mountain
2. Ndg said...
Nice prediction Merv. "Talking building warns inflation will exceed 3%".
3. Neil B said...
QE + low GDP = Inflation
Nice one Labour Government you've turned us into Japan!
4. a saver said...
Obviously the BOE looks only for excuses to cut interest rates, not increase them.
5. Crunchy said...
Of course it's easy to predict something that has been engineered. Well done Merv, but I beat you to it by months. Go figure!
6. rumble said...
But don't you feel safe having a small group of benevolent folk steering everything?
7. 51ck-6-51x said...
Neil B,
You make no sense: Japan has had 2 decades of deflation, not inflation.
8. mark wadsworth said...
@ a saver, that's another Achilles' Heel of Home-Owner-Ism, it only appears to 'work' when interest rates are falling and supply of credit is increasing. What happens when interest rates are +/- zero and there's no more credit sloshing around? It sort of hits a brick wall and hopefully somebody realises that we're going to have to start doing stuff and making stuff and selling stuff.
9. 51ck-6-51x said...
The full report:
http://www.bankofengland.co.uk/publications/inflationreport/ir10feb.pdf
10. 51ck-6-51x said...
matt_the_hatt,
You mean "real GDP", not "real interest rate", right?
11. mountain goat said...
Rumble @6 But don't you feel safe having a small group of benevolent folk steering everything?
"where the US’s Treasury purchases equate to 2 per cent of the country’s GDP, the UK’s gilt-purchase programme accounts for more than 10 per cent of UK GDP. It is QE on a massive scale."
http://ftalphaville.ft.com/blog/2010/02/10/146321/pangs-of-gilts/
Hope this small group of benevolent folk know what they are doing!
12. mountain goat said...
I've bought lots of dollars in case they don't
13. Crunchy said...
8. mark wadsworth
You flat earther you! China is the hiding place of this folly. Ask Phil Jones, if he's still around.
14. estrader said...
@12 MG, do you mean $US? If so, I hope you know what you are doing.
http://www.youtube.com/user/TheSchiffReport&rclk=cti
15. mountain goat said...
@Estrader, yes US dollar.
Peter Schiff is right, the US government is as spend thrift and broke as any, and the dollar stinks. So I hold my nose when I buy it. I am not an expert but I do have eyes. Ever since I started paying attention to the markets when there is a flight for safety the dollar goes up, gold and most other currencies go down. And I am expecting more flight to safety as the liquidity tide goes out in 2010.
16. techieman said...
MG to quote Jayne Eyre - sense and sensibility... others might have pride and prejudice. :-).
17. vacuouspolitician said...
Penfold strikes again...
ooops...I shouldn't say this...but instead say "I fail to see what merv has done that is so wrong"...
Please someone wake the old duffer up or give him a napkin so that Jon Moulton can explain.
Jar Jar Spoon Spoon
18. rumble said...
Seems Schiff is referring to eventual collapse, whereas Greece is happening now. Did schiff say it'll happen when $ loses reserve status - that wouldn't happen in a sudden, single event would it, the reverse status loss due to default would.
19. mountain goat said...
TM - Actually I do have pride and prejudice, especially when it comes to gold and silver coins. Nothing like holding gold in your hand. But that doesn't mean I trust it to hold value in a crisis anymore. And one crisis after another is what seems to be happening.
First it was mortgage holders and banks that went broke when house prices started falling.
No problem sovereigns to bail them out. So house prices and the economy stopped going into freefall.
Now its sovereigns that are broke.
Who is going to bail them/us out?
A lot of folk here think printing will be used to sort this out. In a bad enough crisis printing may come. Not half-hearted QE printing, where bonds are bought, but helicopter printing. Before this decision, as everyone tries to make up their mind what to do, I can imagine one hell of a flight to safety.
20. techieman said...
"Before this decision, as everyone tries to make up their mind what to do, I can imagine one hell of a flight to safety."
Yes those in the know do know the dangers and will only do that if and when all the other bullets have been fired.
I would actually say : I can ONLY imagine one hell of a flight to PERCEIVED safety.
In this context i doubt it matter much what we "think" it only matters what Mr Market does.
21. 51ck-6-51x said...
MG - yes, your eyes do not deceive. Flight is to the dollar as they issue debt almost exclusively in their own currency, it is therefore a safe haven by definition. To see this display itself without any such actual flight observe that a CDS on U.S. Sovereign debt paying out in USD has a positive spread, albeit very small [usually ~3 bps] - I guess this must represent the risk that default occurs without collapse - note that the safest sovereign debts in the world are fairly consistently Norway, Germany, Finland and France - Maybe flight to NOK would be pretty good too - you may want to check that one - it could be a good diversification for you flight strategy.
22. hpwatcher said...
Peter Schiff is right, the US government is as spend thrift and broke as any, and the dollar stinks. So I hold my nose when I buy it. I am not an expert but I do have eyes. Ever since I started paying attention to the markets when there is a flight for safety the dollar goes up, gold and most other currencies go down. And I am expecting more flight to safety as the liquidity tide goes out in 2010.
Although I think the dollar completely shot through, I do hold some. My thinking is that once is starts to go down in any major way, there will be a rally - and a big one. Though I don't see it as a substitute for Gold, which although may drop - as the crisis continues and people liquidate their positions - I believe that it will be a good investment as it is the ultimate risk averse asset.
23. mountain goat said...
TM - I can ONLY imagine one hell of a flight to PERCEIVED safety
Yes definitely, no one knows how things will turn out. I would probably switch a lot of my savings back to gold in my Bullionvault account if the price fell back into the $700 range.
51ck-6-51x - thanks seems worth checking out NOK for available investment vehicles. Good thing about the dollar is its ubiquity as investment.