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Sentance Says Rate Rise Needed To Tackle Accelerating Inflation

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http://www.bloomberg.com/news/2011-01-24/sentance-says-rate-rise-needed-to-tackle-accelerating-inflation.html

Sentance Says Rate Rise Needed to Tackle Accelerating Inflation

By Jennifer Ryan - Jan 24, 2011 6:00 PM GMT

Bank of England policy maker Andrew Sentance said officials need to increase interest rates to keep price pressures from the global recovery and a weaker pound from getting entrenched in the economy.

“When it is clear that global inflationary pressures, coupled with a substantial decline in the exchange rate and reasonably healthy growth of domestic demand are all contributing to a sustained period of above-target inflation, then the time has come to act,” Sentance said in a speech in London today.

While food and fuel prices pushed U.K. inflation to 3.7 percent in December, the 10th month above the government’s 3 percent upper limit, the Monetary Policy Committee held the key rate at 0.5 percent this month to support growth. The central bank targets a 2 percent inflation rate and Sentance said officials’ refusal to curtail emergency stimulus may undermine their credibility and stoke further price gains.

“The lack of a substantive policy response” to consumer- price gains “enhances the risk of a loss of credibility in the inflation target itself and a loss of belief in the commitment of the MPC to achieving it,” he said.

The panel has split three ways since October, when Adam Posen said the bank should expand its bond-purchase plan to prevent inflation from slowing too much once a government spending squeeze takes hold. Posen last week described recent price gains as temporary, indicating he may keep pushing for more stimulus.

The Office for National Statistics may say tomorrow that U.K. economic growth slowed to 0.5 percent in the fourth quarter from 0.7 percent in the previous three months, according to a Bloomberg News survey of economists.

We all know Sentance's stance anyway but it's nice to hear a member of the MPC openly admit that they are losing control.

Minutes of the last meeting out Wednesday.

Edited by Pent Up

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We all know Sentance's stance anyway but it's nice to hear a member of the MPC openly admit that they are losing control.

Minutes of the last meeting out Wednesday.

Bah he's a red herring put there so people think wow they are going to raise rates...

It's not going to happen inflation will be allowed to tear us a new one 30-40 is possible (current inflation is about 15%. They'll keep making noises to shake people out but rates won't rise before 2350.

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"Inflationary pressures are finely balanced with slowing growth coupled with increasing unemployment and a small decrease in house prices. The recent data points to a series of one off events including oil price spikes, natural disasters causing distortions in basic commodity prices and other items. There continues to be a high level of uncertainty in the Eurozone and growth in the United States, while picking up, continues to face strong headwinds. We do not consider it wise to change our policy but to remain vigilant while we continue to monitor inflationary pressure to determine if recent spikes are a trend or a series of one-off occurences."

No chnage to current policy IMO

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http://www.bloomberg.com/news/2011-01-24/sentance-says-rate-rise-needed-to-tackle-accelerating-inflation.html

We all know Sentance's stance anyway but it's nice to hear a member of the MPC openly admit that they are losing control.

Minutes of the last meeting out Wednesday.

Enjoy it while you can.

Jan 23rd

Interestingly, the member who has been most forthright about possible dangers on the inflation front, Andrew Sentance, is shortly to step down from the committee

http://www.guardian.co.uk/business/2011/jan/23/inflation-alarmists-need-historical-perspective

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From his speech today:

Thanks. Has his replacement been announced? Surely it would have to be someone suitabley hawkish as to keep an even balance in opinions.

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It's not going to happen inflation will be allowed to tear us a new one 30-40 is possible (current inflation is about 15%. They'll keep making noises to shake people out but rates won't rise before 2350.]

YES, I Quite agree, and concur with this

2350 is an extremely significant year in the judeo/christian calendar going forward ..........

We might indeed have to wait until this very year until we see such a "rise" in rates :ph34r:

[

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Damn I didn't know that. When does he go?

I didn't know Sentance was going until I read that article today.

Funnily enough it was a another member of the MPC who sent me the link in an email :lol:

I've discussing inflation with him and that article was one of his arguments.

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Bah he's a red herring put there so people think wow they are going to raise rates...

It's not going to happen inflation will be allowed to tear us a new one 30-40 is possible (current inflation is about 15%. They'll keep making noises to shake people out but rates won't rise before 2350.

+1

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what is the point in an inflation target if all you do when you hit it is pat yourself on the back and sing your own praises, but when you fail to reach it you just go oh well, and ignore it.

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“The lack of a substantive policy response” to consumer- price gains “enhances the risk of a loss of credibility in the inflation target itself and a loss of belief in the commitment of the MPC to achieving it,”

I don't care about their credibility. What I do care about is my savings being worth less every week

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Bah he's a red herring put there so people think wow they are going to raise rates...

It's not going to happen inflation will be allowed to tear us a new one 30-40 is possible (current inflation is about 15%. They'll keep making noises to shake people out but rates won't rise before 2350.

Yep.. that's how I read it.

He's the "bad boy" they wheel out when they are being criticised over ignoring their inflation target to make it look like they are taking it seriously.

In actually fact I expect Mervyn just asks him to get out there and "manage inflation expectations".

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      • down 5% +
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