Jump to content
House Price Crash Forum
Realistbear

Merv Caves In: I R "might" Rise Sooner Than Expected

Recommended Posts

http://uk.finance.yahoo.com/news/Inflation-surges-4-percent-reuters_molt-2891850615.html?x=0

LONDON (
Reuters
) - Inflation rose to double the Bank of England's target in January, prompting Bank Governor Mervyn King to acknowledge on Tuesday that interest rates
might rise more rapidly than previously expected
.
..../
Sterling hit a four-week high against the euro
and interest rate futures fell as investors grew more confident the Bank would be forced to raise rates in the first half of the year, most likely in May.
"King effectively endorsed market rate expectations. We now expect the next move from the Bank of England to be a 25 basis point rate hike in May with balanced risks around the timing," said Nomura economist Philip Rush.

Looks like some HPI carnage coming our way very soon. Sterling is riding high on the anticipation of higher IR which will, in the MT and LT, put the final nails in UK Plc and the HPI foundation upon which it has been built.

And do not underestimate a .25% hike--that is a 50% rise in IR which will filter all the way to the overleveraged sheeple until it becomes 2.5% hike on a 5% variable rate.

Share this post


Link to post
Share on other sites

http://uk.finance.yahoo.com/news/Inflation-surges-4-percent-reuters_molt-2891850615.html?x=0

LONDON (
Reuters
) - Inflation rose to double the Bank of England's target in January, prompting Bank Governor Mervyn King to acknowledge on Tuesday that interest rates
might rise more rapidly than previously expected
.
talk is cheap. They will talk talk talk and still do nothing.

Share this post


Link to post
Share on other sites

talk is cheap. They will talk talk talk and still do nothing.

I think this is possibly right--all the time he talks hikes the market will follow as if he was going to actually raise rates. In the meantime, Sterling takes off against the Euro, CHF and the $ making imports cost less. Inflation solved at no cost to the housing market. Or so he thinks.

If I was going to bet on what Merv will do I would expect him to raise once later this year and quickly reverse when he sees house prices start to crash. However, he may not see it until it is too late as the VI data will not reflect market reality for fear of panic.

Share this post


Link to post
Share on other sites

The inflation will always be temporary.

What they don't tell you is that once it has all blown over - you will be poor.

And guess who will be rich? The Banksters. They are in a win-win mode no matter what happens. The only sector to be unscathed.

Share this post


Link to post
Share on other sites

Like most criminals, King is a compulsive liar. I don't expect the BoE to raise rates unless they are forced to.

Yep rates won't increase until there is no other choice.

I'm wondering if they'll split the rates, the proles get the higher rates whilst the bankers get a lower one.

Share this post


Link to post
Share on other sites

Merv seems a bit bifurcated in this piccy. Some might say he looks like a real banker.

Some headlines say he is reversing his previous vigilance and others say he is in the nile.

http://www.bloomberg.com/news/2011-02-15/u-k-inflation-quickens-to-highest-level-in-26-months-forcing-king-letter.html

King Sticks to Inflation Defense as Price Growth Soars to 4%

merv.jpg

post-1066-0-53432600-1297780616_thumb.jpg

Edited by Realistbear

Share this post


Link to post
Share on other sites

Merv seems a bit bifurcated in this piccy. Some might say he looks like a real banker.

Some headlines say he is reversing his previous vigilance and others say he is in the nile.

http://www.bloomberg.com/news/2011-02-15/u-k-inflation-quickens-to-highest-level-in-26-months-forcing-king-letter.html

King Sticks to Inflation Defense as Price Growth Soars to 4%

As any central banker, his job is to look after the banking sector's interests. And the banks have never had it better. Job done well.

Anyone who thinks otherwise is a fool.

BTW, central bankers don't give a shit about countries - they are globalists and globalists have no respect for nationalities. Care to prove me wrong?

Share this post


Link to post
Share on other sites

And do not underestimate a .25% hike--that is a 50% rise in IR which will filter all the way to the overleveraged sheeple until it becomes 2.5% hike on a 5% variable rate.

To be fair, it's not is it, the average mortgage is at 3.5%, so it's only a 7% rise.

I think many people who have been lulled into "mortgages are at their cheapest in 8yrs" don't realise they're on 3% over base.. which is fine when rates are at 0.5% ..

Share this post


Link to post
Share on other sites

if you read the Sky News website, there is a lot of anger on there about what is happening.

The cat is out of the bag on inflation. For a long time it was the ultimate stealth tax, silently transferring wealth out of the pockets of the general public and into those of the government and banks without Joe Public even noticing the theft. But thanks to the utter failure of the BoE to keep a lid on it - and I don't just mean according to the official figures which grossly underestimate real inflation, I mean real world inflation - the public have now noticed that they are getting relatively poorer and aren't too happy about it.

Given that the money printing and ZIRP has been successful enough that the prospect of total economic crash has receded from the forefront of the public consciousness, it means we are now looking at a period of pressure for pay rises and all out runaway inflation.

Well done MPC.

Share this post


Link to post
Share on other sites

But the crap reality is that a 25pt increase isnt going to do anything. Its going to make £35 per month difference.

If you think about how long it has taken to get a 25pt rise it will be another 12y to get to 1.5% rates :angry:

Share this post


Link to post
Share on other sites

Inflation only happens when you include things in the index that increase in price. So all they need to do is include housing (now that it's falling) and take out 'external or international factors' such as energy and fuel. Job done inflation back on target at 2%. This approach works with the figures for unemployment so it will work for the inflation index.

Doesn't stop you getting poorer.

Share this post


Link to post
Share on other sites

Yep rates won't increase until there is no other choice.

I'm wondering if they'll split the rates, the proles get the higher rates whilst the bankers get a lower one.

This is already the case.

For borrowers :

What percentage interest do you borrow at? (if you borrow)

What percentage interest do they borrow at?

For savers :

What rate do you get on your savings?

What rates are they earning using your savings?

Share this post


Link to post
Share on other sites

I think that the IMF is likely to be engaged elsewhere with Portugal looking like it will be next. Unless there is a change tomorrow in the Quarterly Inflation Report I doubt whether we will see a change in the Bank of England's strategy which involves claiming firstly that inflation is "temporary" as a result of "one-offs" and if that fails to say it is a type of inflation it cannot control...

However I did read an article which points out how wrong they have been which often gets forgotten by the mainstream media.

Let us go back to the quarterly inflation report from February 2010 and examine what it forecast for now. The emphasis is mine.

CPI inflation is likely to remain elevated in the near term, given the restoration of the standard rate of VAT to 17.5% and the continuing adjustment to the past depreciation of sterling, before persistent spare capacity causes it to fall back to below the target. ….. it is more likely than not that inflation will be below the target for much of the forecast period,

If we look at the accompanying fan chart we can see that the Bank of England expected CPI inflation to be approximately 1% at this time before drifting up to 2% in 2013.

http://t.co/Ks8NJYI

So the wrong forecast has led to the wrong policy.....

Share this post


Link to post
Share on other sites

If I was going to bet on what Merv will do I would expect him to raise once later this year and quickly reverse when he sees house prices start to crash. However, he may not see it until it is too late as the VI data will not reflect market reality for fear of panic.

Sterling would get crushed if interest rates were reversed after an increase! Unemployment, petrol and food inflation are doing enough to stall the housing market by themselves! Merv's dithering is leading Britain to a point where interest rates rises won't be big enough to stem inflation. Mortgage costs could get nasty. We've been here before.

.........and Sterling powers ahead on Merv's procrastination. :lol:

Share this post


Link to post
Share on other sites

To be fair, it's not is it, the average mortgage is at 3.5%, so it's only a 7% rise.

I think many people who have been lulled into "mortgages are at their cheapest in 8yrs" don't realise they're on 3% over base.. which is fine when rates are at 0.5% ..

So in 2003 mortgage rates were much lower than they are today but interest rates were much higher. Just proves there's no need to rush out and buy because you want to lock into a low rate. Does anyone know where I can find historical mortgage rates?

Share this post


Link to post
Share on other sites

Sterling would get crushed if interest rates were reversed after an increase! Unemployment, petrol and food inflation are doing enough to stall the housing market by themselves! Merv's dithering is leading Britain to a point where interest rates rises won't be big enough to stem inflation. Mortgage costs could get nasty. We've been here before.

.........and Sterling powers ahead on Merv's procrastination. :lol:

I think sterling will plummet if merv doesn't raise rates within the next month or two. It's priced in now.

Share this post


Link to post
Share on other sites
Alan Clarke, UK economist at BNP Paribas (BNPQF.PK - news) , speculated that minutes to the February meeting, due out next week, could show a 6-3 or even a 5-4 split.

They know that they are looking like fools now and are gradually caving in... too little too late as usual.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 276 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.