Merv's Credibility Eroding Fast Among Top Economists Due To His "vigilance"

[Realistbear]

http://uk.finance.yahoo.com/news/Bank-England-pressure-raise-tele-3413146325.html?x=0

Bank of England under pressure to raise interest rates after inflation expectations hit two-year high

As the Bank's central remit is to keep inflation within a percentage point of its 2pc target, the sharp increase in expectations and the current 3.3pc rate

raises questions about the Bank's inflation-taming credibility

. Joost Beaumont, an economist at ABN Amro, said: "This ... is slightly starting to affect the Bank's credibility as an inflation fighter."

Mervyn King, the

Governor of the Bank, has warned*

of a "costly" rise in interest rates from their current historically low level of 0.5pc if higher inflation expectations become entrenched.

The Bank is acutely conscious of the problem, which it fears could trigger a self-fulfilling inflation spiral. Three members of the rate-setting Monetary Policy Committee (MPC (050540.KQ - news) ) have given speeches stressing that the Bank has not "gone soft" on inflation in the past two weeks alone.

Economists, though, believe the Bank may soon have to start taking action

as the words appear not to be working

.

Most on here know why he cannot raise the rates and his excuses and "vigilance" seem to be running into a credibility gap that may get too wide and then the bonds will start to react forcing IR up whether the HPI VIs like it or not. The market will win in the end.

We must take the medicine, accept a HPC, and rebuild our nation WITHOUT HPI as the central engine for growth and "wealth."

____________________

* Merv is acting like a Firechief warning people that a fire is getting out of control while sitting idly by and saying no need to use the hoses as vigilance is doing the trick.

Edited December 17, 2010 by Realistbear

[Lepista]

* Merv is acting like a Firechief warning people that a fire is getting out of control while sitting idly by and saying no need to use the hoses as vigilance is doing the trick.

It's 'elf 'n' safety, guv'nor.

p.s. That's good, for you, RB

[dances with sheeple]

http://uk.finance.ya...146325.html?x=0

Bank of England under pressure to raise interest rates after inflation expectations hit two-year high

As the Bank's central remit is to keep inflation within a percentage point of its 2pc target, the sharp increase in expectations and the current 3.3pc rate

raises questions about the Bank's inflation-taming credibility

. Joost Beaumont, an economist at ABN Amro, said: "This ... is slightly starting to affect the Bank's credibility as an inflation fighter."

Mervyn King, the

Governor of the Bank, has warned*

of a "costly" rise in interest rates from their current historically low level of 0.5pc if higher inflation expectations become entrenched.

The Bank is acutely conscious of the problem, which it fears could trigger a self-fulfilling inflation spiral. Three members of the rate-setting Monetary Policy Committee (MPC (050540.KQ - news) ) have given speeches stressing that the Bank has not "gone soft" on inflation in the past two weeks alone.

Economists, though, believe the Bank may soon have to start taking action

as the words appear not to be working

.

Most on here know why he cannot raise the rates and his excuses and "vigilance" seem to be running into a credibility gap that may get too wide and then the bonds will start to react forcing IR up whether the HPI VIs like it or not. The market will win in the end.

We must take the medicine, accept a HPC, and rebuild our nation WITHOUT HPI as the central engine for growth and "wealth."

____________________

* Merv is acting like a Firechief warning people that a fire is getting out of control while sitting idly by and saying no need to use the hoses as vigilance is doing the trick.

Yes, although this medicine will make the average property obsessed sheep very ill indeed.

[R K]

His 'problem' is that he knows China is going to crash and burn and take commodities down with it but there's a nasty gap between now and then - If they raise now they're only going to be queasing again in 6-12 months time.

[Pent Up]

I think a rise in Q1 2011 is on the cards. just to help calm things.

[rantnrave]

I think a rise in Q1 2011 is on the cards. just to help calm things.

I'm not so sure. I think the VAT rise has given them the perfect excuse to explain rising inflation figures and why no action needs to be taken to fight it. All Merv and co had to do was hang on until Jan and they've pulled it off.

I'll risk going on record that a rise in IRs is at least six months and more than likely a year away.

[non frog]

....

We must take the medicine, accept a HPC, and rebuild our nation WITHOUT HPI as the central engine for growth and "wealth."

....

Take the medicine by all means but there is no other growth engine. HPI drives the debt fuelled consumption that is the UK (and US) economy(ies).

[billybong]

vigilant

1.keenly watchful to detect danger; wary: a vigilant sentry.

2.ever awake and alert; sleeplessly watchful.

Now the opposite of vigilant is negligent.

negligent

1. habitually failing to do the required thing; neglectful.

2. careless, lax, inattentive, or indifferent.

Which adjective fits the BoE best

[@contradevian]

vigilant

1.keenly watchful to detect danger; wary: a vigilant sentry.

2.ever awake and alert; sleeplessly watchful.

Now the opposite of vigilant is negligent.

negligent

1. habitually failing to do the required thing; neglectful.

2. careless, lax, inattentive, or indifferent.

Which adjective fits the BoE best

They are negligent at being vigilant?

[Alan B'Stard MP]

They are negligent at being vigilant?

I suspect it's the reverse.

[babesagainstmachines]

One thing is for sure - there is more pressure building up on the BoE to start doing it's job. Whether it will cause an actual change in policy, who knows, but at least we are seeing some media pressure.

[MrFlibble]

He'll no doubt use the VAT increase to justify inflation being so high early next year and then when the housing market goes to rat shit again the printing press will be brought back out.

The housing market will be toast if the base rates starts to rise. All those FTB's sitting around in their underpants waiting to buy won't be touching anything if they think the base rate is on the up and up. Plus all the clowns who have overcooked it will be in dire straights driving prices down as they rush for the exits.

Rising interest rates adding fuel on the fire of falling prices - not a chance, but if it's possible bring it on

Edited December 17, 2010 by MrFlibble

[The Masked Tulip]

My tuppence - I miss those avatars with the jiggly boobies.

[rantnrave]

Merv's credibility is not in doubt or on the line here... We passed that stage a long time ago.

EDIT - that's a pretty poor posting to make the big 200 really. Will aim for better next time there's a big number coming up.

Edited December 17, 2010 by rantnrave

[scappers]

"entrenched" must mean "a period of at least 2 years" ... although we're fast approaching that ...

[ccc]

How can something that does not exist erode ?

[Tired of Waiting]

I'm not so sure. I think the VAT rise has given them the perfect excuse to explain rising inflation figures and why no action needs to be taken to fight it. All Merv and co had to do was hang on until Jan and they've pulled it off.

I'll risk going on record that a rise in IRs is at least six months and more than likely a year away.

I don't know... They could, should at least signal the direction. They could increase IRs by the minimum amount, 0.25, just to indicate to the sheeple that IRs will go up, and that those that are in debt, and already having troubles servicing it, should take measures to prepare for these IRs increases.

The bank is worried about people with too much debt not using this low IR opportunity to reduce debt levels. But unless the bank sends a signal - and a signal that reaches these people, via BBC and ITV news, and tabloids - then these people will simply not get the message.

[Tired of Waiting]

Take the medicine by all means but there is no other growth engine. HPI drives the debt fuelled consumption that is the UK (and US) economy(ies).

We will have to import much less, rebalancing the foreign accounts. We have no choice there. We can't finance that deficit any more.

And Sterling will have to fall for that to happen.

[Dorkins]

How is the BoE in any way an "inflation fighter"? Their mandate is to create inflation!

Edited December 17, 2010 by Dorkins

[happy_renting]

How is the BoE in any way an "inflation fighter"? Their mandate is to create inflation!

Yes, when a government 'controls' inflstion, it is state erosion of wealth. Effectively another tax.

[Blod]

Isn't the plan to hold on till event in the markets force either a rates rise or visible QE2 that way he can be seen to be doing something. That way they can void any blame even though they've done nothing to help prevent it and neatly pass the blame for any HPC that transpires to external powers beyond their control. Remember that the inevitable HPC is going to wreck our domestic banks and they don't want to take the can for that.