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Ursa Minor

Mpc Predictions

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If they've got any brains (or b@lls!) they'll move to head off inflation, and reverse their earlier cut.

But with the usual bleating from the retail sector/VIs, and some pretty bearish news reporting recently, they wont want to look like they are "kicking the economy when it's down" (though I belive a healthy dose of higher rates is "being cruel to be kind"), so they'll leave them on hold.

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It's coming soon - what are peoples predictions, hopes and fears?

UM

Wow, thats the first time I've ever seen a poll on here at 100% agreement (may have changed since I voted).

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Next month's inflation report will point the way. We are still on the top of their fan chart, let's see how far up they adjust it this time.

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I think that they should raise them but I'm sure that they will hold them.

It would seem we all agree that they will do the wrong thing for the wrong reasons, depressing.

I agree. (unsurprisingly)

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I think that they should raise them but I'm sure that they will hold them.

It would seem we all agree that they will do the wrong thing for the wrong reasons, depressing.

Absolutely. I have voted for a hold, (a mistake IMO, the move should be up, this is going on what has been said around the last decision. But I would not be shocked by a cut. Yep, the wrong move but who knows. Going on past moves: some are muppets and half are puppets.

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[[Hold in October, then as long as inflation remains below 3.0%, a 0.25% cut in November.]]

I am not so sure. How is a cut in November going to help pull inflation 2 years out (which is what the MPC are targetted to do) back to 2%? How can they when the US is raising inexorably, ECB will be increasing too and Japan seems to be on the upturn economy-wise which will lead to a slow uptick in their rates. The £ would get hammered and lead to inflation increasing surely as the cost of imports rose.

Does it all mean that, to date, the MPC have got interest rates wrong 2 years ago if we are heading above 3% inflation in the next few months? Unexpected oil price increases I accept cannot be predicted that far in advance but should be within the tolerances they build into their models on a statistical basis - particularly as the rise in oil price would normally take a good while to fully feature in the inflation figures - what we seeing is the oil price being used to mask the long awaited rebirth of inflation as a result of Gordon's binge. I think the real effects of oil (assuming it stays at or above current levels) will not be felt for another few months

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Guest absolutezero

I think it should be a 0.25% rise but I fear it will be a 0.25% cut.

The economy is slowing down so I think they'll try to keep it afloat by keeping the cost of borrowing down.

People I talk to don't have any money.

How long can the charade be kept up for?

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Guest Alright Jack

Expect higher inflation figures for a while yet. There is no way they will let the economy tank just to preserve the financial capital of the few. NuLab are socialists. Inflation is the principle tool of wealth redistribution - and they are using it pretty deftly. Why would Gord run up a large budget defecit, announce continuing public service expansion (reforms) and then hike the borrowing cost forcing him to raise taxes? It doesn't make any sense. NuLabour - LoRates.

They are not interested in CPI at tolerable levels of 4-5% if it means the economy bumps along reasonably.

..,minimum wage up 1st october.

If you want unbounded wealth inequality then vote Tory next time.

And as for a house price crash... :lol::lol::lol::lol:

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Guest absolutezero
Expect higher inflation figures for a while yet. There is no way they will let the economy tank just to preserve the financial capital of the few. NuLab are socialists. Inflation is the principle tool of wealth redistribution - and they are using it pretty deftly. Why would Gord run up a large budget defecit, announce continuing public service expansion (reforms) and then hike the borrowing cost forcing him to raise taxes? It doesn't make any sense. NuLabour - LoRates.

They are not interested in CPI at tolerable levels of 4-5% if it means the economy bumps along reasonably.

..,minimum wage up 1st october.

If you want unbounded wealth inequality then vote Tory next time.

And as for a house price crash... :lol::lol::lol::lol:

I think your whole post can be dismissed with one quote.

"NuLab are socialists".

You obviously have no idea about anything, have you?

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Guest Alright Jack
I think your whole post can be dismissed with one quote.

"NuLab are socialists".

You obviously have no idea about anything, have you?

Go and ask Gordon Brown if he is a socialist. He will say yes. If they were not, they wouldn't be in the Labour Party.

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If you want unbounded wealth inequality then vote Tory next time.

The problem is the rich are getting richer, maybe even faster. The poor are being held constant and the middle is being pulled down to being poor.

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I think that they should raise them but I'm sure that they will hold them.

Ditto.

The problem is the rich are getting richer, maybe even faster. The poor are being held constant and the middle is being pulled down to being poor.

That's what happens when you get a big-spending government that fiddles the inflation figures for years... more and more taxes and lower and lower real wages.

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Guest absolutezero
Go and ask Gordon Brown if he is a socialist. He will say yes. If they were not, they wouldn't be in the Labour Party.

Go and ask the man in the local asylum if he's really Lord Nelson. He will say yes.

Doesn't mean it's true.

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Expect higher inflation figures for a while yet. There is no way they will let the economy tank just to preserve the financial capital of the few. NuLab are socialists. Inflation is the principle tool of wealth redistribution - and they are using it pretty deftly. Why would Gord run up a large budget defecit, announce continuing public service expansion (reforms) and then hike the borrowing cost forcing him to raise taxes? It doesn't make any sense. NuLabour - LoRates.

They are not interested in CPI at tolerable levels of 4-5% if it means the economy bumps along reasonably.

..,minimum wage up 1st october.

If you want unbounded wealth inequality then vote Tory next time.

And as for a house price crash... :lol::lol::lol::lol:

I’ll put aside my suspicions that you are a troll and reply……

Firstly you are correct that inflation re-distributes wealth. But you are very wide of the mark in the direction of the redistribution. It flows from the poor to the rich.

Take for instance wages and make the assumption that wages increase (%) as inflation increases (%). If someone initially on 100K gets a 10% pay rise the differential between him /her to someone on 10K (awarded the same 10% pay rise) becomes greater in absolute terms GBP. (Quite often, I’ve noted, in high inflationary periods, the higher earners will get a bigger % increase – but I’ll leave that one there). If we can also assume that someone on 10K has little to no disposable income as oppose to the 100K wage earner then it make the situation worse. More of the lower earner’s money goes on the very basic cost of living – he / she is “financially dis-empowered”; relatively and absolutely.

I could go on and expand on assets, those on pensions (tied to 5% increases when the RPI is say 7%) and savings, but the above illustration is the best one I can think of.

Having made comment on the direction of the redistribution I have to say that inflation will erode everyone’s wealth, rich or poor.

As for socialists redistributing wealth and helping the poor?

Putting all political bias aside for one moment – I think I’ve observed the opposite to be true.

Government (no matter which hue they are) have plans, ideas and initiatives – small and large. At best the net effect of many of these comes to zero. More often than not, in perhaps my opinion only, they have the opposite effect than what was initially desired.

I’m not saying the conservatives are “for the working man”, but they seem, in general, to have helped many of the “working class” (by both intent and accident).

The socialist government we have at the moment (at least we agree on something) will if my little theorem is correct, have had the net effect of increasing the gap between rich and poor.

Vinny.

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Guest Alright Jack
I’ll put aside my suspicions that you are a troll and reply……

Firstly you are correct that inflation re-distributes wealth. But you are very wide of the mark in the direction of the redistribution. It flows from the poor to the rich.

Take for instance wages and make the assumption that wages increase (%) as inflation increases (%). If someone initially on 100K gets a 10% pay rise the differential between him /her to someone on 10K (awarded the same 10% pay rise) becomes greater in absolute terms GBP. (Quite often, I’ve noted, in high inflationary periods, the higher earners will get a bigger % increase – but I’ll leave that one there). If we can also assume that someone on 10K has little to no disposable income as oppose to the 100K wage earner then it make the situation worse. More of the lower earner’s money goes on the very basic cost of living – he / she is “financially dis-empowered”; relatively and absolutely.

I could go on and expand on assets, those on pensions (tied to 5% increases when the RPI is say 7%) and savings, but the above illustration is the best one I can think of.

Having made comment on the direction of the redistribution I have to say that inflation will erode everyone’s wealth, rich or poor.

As for socialists redistributing wealth and helping the poor?

Putting all political bias aside for one moment – I think I’ve observed the opposite to be true.

Government (no matter which hue they are) have plans, ideas and initiatives – small and large. At best the net effect of many of these comes to zero. More often than not, in perhaps my opinion only, they have the opposite effect than what was initially desired.

I’m not saying the conservatives are “for the working man”, but they seem, in general, to have helped many of the “working class” (by both intent and accident).

The socialist government we have at the moment (at least we agree on something) will if my little theorem is correct, have had the net effect of increasing the gap between rich and poor.

Vinny.

In absolute terms yes. the wealth gap appears wider but you are neglecting the inflation in consumer prices. Person on higher amount will still only be able to buy x times the number of pints of milk as the lower earner on that basis.

However, the high earner is paying a hugely higher proportion of his 'additional' income in tax. The lower earner is hardly paying any tax (if any even).

However, in an inflationary environment the situation demands some expertise for the higher earner trying to keep hold of thier wealth. There are endless threads on this forum from HPCers with bags of cash that they are unsure over what they should do.

They either take risks in other investments or take the risk of keeping it on deposit.

Inflation destroys savings and financial capital easing debtors and, in particular, the gvmt deficit allowing further public spending which helps the more modest people in society and even creates employment opportunity curtousy of our big earners :)

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Guest Bart of Darkness
Go and ask Gordon Brown if he is a socialist. He will say yes. If they were not, they wouldn't be in the Labour Party.

You really are very simple minded aren't you?

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AJ,

I agree, partially, with many of your points in reply:

Quote:“absolute terms yes. the wealth gap appears wider but you are neglecting the inflation in consumer prices. Person on higher amount will still only be able to buy x times the number of pints of milk as the lower earner on that basis.

However, the high earner is paying a hugely higher proportion of his 'additional' income in tax. The lower earner is hardly paying any tax (if any even).”

I think I understand where you are coming from with this one. A higher rate taxpayer will probably pay (proportionately) more tax, and this will probably (percentage wise) increase with inflation / wage rise(s). I would balance this somewhat with the tax bands (which should be) moving as wages / inflation increase. Your argument holds some water – so far.

I have to say though, that the current Labour government have not moved the bands as they (IMO) should. More and more “middle” income earners are being dragged into the 40% bracket – not a good move for the country, continued house price increases (yippee) or, dare I say, votes for a socialist party.

One could also make mention of National Insurance. Indeed Labour have removed the upper limit, in effect the top rate of tax is now closer to 41%. These points do indeed continue to partly support your argument again. However wage rises compound over time and tax bands will generally follow. Eventually the percentage difference in tax “saving” is eroded by wage inflation itself. Thus the higher earner’s take home pay will be greater in the long run, by any measure. There are also very long term effects – the best example I can think of is the higher earner in a final salary pension scheme – now far better off than those reliant on the a government pension. (Two-thirds rule being one factor).

You could also consider the possibility of, and Blair has spoken of this, a flat tax system.

Quote: “However, in an inflationary environment the situation demands some expertise for the higher earner trying to keep hold of thier wealth. There are endless threads on this forum from HPCers with bags of cash that they are unsure over what they should do.

They either take risks in other investments or take the risk of keeping it on deposit.

Inflation destroys savings and financial capital easing debtors and, in particular, the gvmt deficit allowing further public spending which helps the more modest people in society and even creates employment opportunity curtousy of our big earners ”

I’m making some assumptions here…………….

Here’s the trick, the higher earner will on the balance of probabilities, have investments, and continue to invest. If my wage argument is right this will compound the inequality. Lower earners also tend “save”, in my experience, rather than “invest”.

Their capital stuck in a bank account is a sitting duck in a high inflationary period, whilst those who are able and will look for other alternatives may thrive. There will always be investors who will lose out, but a savings account is the surest way of losing general purchasing power over time. More inequality results IMO.

I would agree with the government deficit portion here as well, it could also help by covering up government (as it does business) inefficiency also – allowing more to be spent. But I’m not sure that I agree that on balance a government may be better positioned to spend.

I think this is too complex (for me at least) to have a definite opinion on. But would the debt erosion / increased tax take be eaten up or even outstripped by forced increased governmental spending? (I’m thinking increased state pensions, civil servant’s wages, increased cost of projects etc). I’m not sure on this one.

Lastly,Please accept my apology for insinuating you might be a troll.

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  • 301 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%



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