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Inflation Up To 3.7%, Rpi 5.3%


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Inflation up again, IR's seemingly fixed at 0.5% as any rise will collapse the economy (read housing market). Times are going to get interesting for the house of cards that has been built on the back of cheap and easy credit.

Now that the election has been and the Nokia yielding pyscho known as Brown has left number 10, the ONS are no longer scared to publish the true figures. I think no one here is surprised that inflation is that high. But the real question is whether or not the BoE have the balls to put interest rates up. It wouldnt surprise me if now they are pushed upwards. The pressure is certainly there to

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The vice is starting to close, in my opinion we are nearing the peak of the 'return to normal' part of the bubble graph, especially seeing the ridiculous headlines we see today in the Express. Imagine the impact of historically 'average' IR's of say 6-7%.

When the house built on sand starts to collapse there is going to be utter carnage. Imagine being on the average wage, paying £1000 per month mortgage on a skanky 1 bed flat in an area where the average rat wouldn't want to live. The only question is, how fast is the vice going to close ?

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surely they have to rise now? It's starting to get out of hand and we still have not had the tax rises. Is the spare capacity they keep banging on about actually there? After all the jib cuts businesses cut backs etc surely they spare capacity is severly restricted.

I've seen several forecasts of a June rise recently this should add a bit more weight to those predictions.

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Just to be clear, I made a mistake on the RPI figure in the title, I forgot to put the '3' in after the point. It's actually 5.3%

Excellent...6.3%+ interest, tax free, on that part of my savings, APR equivant, about 10% ( before tax ).

If only my other savings were doing so well...

What happens to NS&I index linked savings certs if/when the government go bankrupt ?

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Is there a force point, where interest rates have to go up?

Unfortunately the most important factor is US Fed policy.

The UK property market benefits more from low Fed rates than the US does.

If the UK rates rise, then Sterling will become uncompetitive against the Dollar, Euro and the Yuan.

However, I think that this is an important signal that rates could start rising in the near future...

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Rates will now have to rise.

Since the RPI figure is one used for pay negotiations, any attempt at imposing public sector pay cuts will rejected out of hand if it looks like inflation is still rising. With these figures a 5% pay cut is effectively a 10% cut.

My prediction - a 0.25% rate rise at the next meeting - for appearances mainly.

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Rates will now have to rise.

Since the RPI figure is one used for pay negotiations, any attempt at imposing public sector pay cuts will rejected out of hand if it looks like inflation is still rising. With these figures a 5% pay cut is effectively a 10% cut.

My prediction - a 0.25% rate rise at the next meeting - for appearances mainly.

Forgot to mention, RPI at >5% also makes it less acceptable to implement a VAT increase as that will cause the figures to rise as well.

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If the UK rates rise, then Sterling will become uncompetitive against the Dollar, Euro and the Yuan.

Uncompetitive?

Sterlng has collapsed and the much vaunted exchange rate improvement in exports has not happened, the trade deficit is as big as it ever was.

Manufacturing workers tied to 180K per house housing are going to manufacture jack shit in this world.

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