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Sir Merve And His Merry Men Still Failing

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(CPI) annual rate of inflation held steady in May at 4.5%.

The Retail Prices Index (RPI) measure of inflation - which includes mortgage interest payments - was also unchanged at 5.2%

How can we reward Merve further for failing again and again at his job with no prospect of him ever being able to arrest the inflation which his the remit

http://www.bbc.co.uk/news/business-13759286

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http://www.bbc.co.uk...siness-13759286

UK CPI inflation holds steady at 4.5%

The UK Consumer Prices Index (CPI) annual rate of inflation held steady in May at 4.5%. The Retail Prices Index (RPI) measure of inflation - which includes mortgage interest payments - was also unchanged at 5.2%, according to the Office for National Statistics (ONS).

Fuel and food prices continued to be the main contributors, with both components up 1.3% from April.

Air transport costs fell sharply in the month as Easter peak fares ended.

However, over the course of the past 12 months, alcoholic beverages and tobacco recorded a 9.8% increase - the highest year-on-year rise on record - thanks in part to the VAT rise.

Fuel prices also accelerated, up 13.7% compared with a year ago.

The overall inflation figure was in line with market expectations.

Bank resistance It follows a rise to 4.5% in April - the highest inflation rate since October 2008 - from 4% in March.

The Bank of England expects CPI inflation to rise above 5% in the next three months, well above its 2% target.

The Bank has resisted calls to raise interest rates - seen as the most effective policy tool in combating inflation - on the basis that temporary, external factors, such as rising oil and food costs, are driving price rises.

It believes raising rates could undermine the UK's fragile economic recovery.

For this reason, earlier this month it held rates at a record low of 0.5% for the 27th month in a row.

However, for the previous four months, three members of the Bank's rate-setting Monetary Policy Committee have voted to increase rates.

Edited by koala_bear

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yes they are failing in their set objectives of controlling inflation. But they are over exceeding in walking a tightrope of 5% inflation to erode debt levels. When your boxed into a corner and you see no way out you must hanker down and make do with what you have.

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Kinda quelled by lower air fares. Things weren't so clever in other, more mainstream areas.

Air transport costs fell sharply in the month as Easter peak fares ended.

However, over the course of the past 12 months, alcoholic beverages and tobacco recorded a 9.8% increase - the highest year-on-year rise on record

Fuel prices also accelerated, up 13.7% compared with a year ago.

Edited by exiges

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yes they are failing in their set objectives of controlling inflation. But they are over exceeding in walking a tightrope of 5% inflation to erode debt levels. When your boxed into a corner and you see no way out you must hanker down and make do with what you have.

Business guy on Fivelive just hinted at this stating that inflation is above target despite IRs being at the lowest levels ever for 2 years.

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Business guy on Fivelive just hinted at this stating that inflation is above target despite IRs being at the lowest levels ever for 2 years.

Despite!!!???

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yes they are failing in their set objectives of controlling inflation. But they are over exceeding in walking a tightrope of 5% inflation to erode debt levels. When your boxed into a corner and you see no way out you must hanker down and make do with what you have.

Not sure how debt levels are eroded if pay is not keeping up with inflation. Still, I don't have an index linked pension to fall back on.

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Failing ? Merv's quite chuffed, he thought it was going to be higher.. quite the result

Of course, it's only temporary anyway, in the same way dinosaurs only inhabited this planet temporarily.

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(CPI) annual rate of inflation held steady in May at 4.5%.

The Retail Prices Index (RPI) measure of inflation - which includes mortgage interest payments - was also unchanged at 5.2%

How can we reward Merve further for failing again and again at his job with no prospect of him ever being able to arrest the inflation which his the remit

http://www.bbc.co.uk/news/business-13759286

Ah, but it hasn't gone UP. Therefore, Merv's vigilance is paying off. <_<

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Business guy on Fivelive just hinted at this stating that inflation is above target despite IRs being at the lowest levels ever for 2 years.

Given that mortgage costs would jump in line with any IR hike, this does make short term sense.

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Of course, it's only temporary anyway, in the same way dinosaurs only inhabited this planet temporarily.

in say ten thousand years time if Merve was exhibited at a museum as a typical banker back in the time of massive debt, doubt if anyone would believe people looked like that.

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You mean Sir Index-Linked Pension King ?

Don't forget his pension will only be index-linked to RPI.

If you believe RPI understates true inflation then actually he (and the rest of the BofE staff) are losing out...

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I'm amazed that so many people think Merv is 'failing' at 'his job'. His real job is to keep the banks in clover despite the monumentally p1sspoor investments they have made over the last 15+ years. He's doing a great job at this. I don't think he really cares what Mondeo Man is paying for a loaf of bread, he just wants to avoid another 2008 by keeping the system flooded with cash.

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Mervyn King ... patron saint of THE INDEBTED :angry:

I'm tempted to put:

:D *

But I'd be lynched..

* Until my combined saving and pension fund exceed the size of my mortgage, in which case

:(

But that's at least 5 years away..

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"Steady"?! Who are they fooling?

Calm down dear.. OK, so we're heading towards financial oblivion, that's no the point.. the point is we're not heading there any faster ! Hurrah !

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Calm down dear.. OK, so we're heading towards financial oblivion, that's no the point.. the point is we're not heading there any faster ! Hurrah !

Yes, the handbasket is heading towards Hell at a steady rate ... thanks to the BoE I can sleep well at night ..... :unsure:

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There is something of a contradiction to the usual Bank of England line about inflation being temporary in the latest Bank Of England Quarterly Bulletin.

The Bank of England Quarterly Bulletin

Of course if we return to the UK the Bank of England has its own problems with inflation as it has been over target for quite some time. Indeed a research paper for the Quarterly Bulletin which was released yesterday had this as a title.

International evidence on inflation expectations during Sustained Off-Target Inflation episodes

I wonder who they have in mind as someone who might use this research? More seriously we do get a rationale for the research.

The high level of UK inflation in recent years raises the possibility that inflation expectations may drift upwards, making the period of above-target inflation last for longer

Er well exactly and anyone other than the Bank of England would change the word possibly to probably! However we then get perhaps the most revealing statement of all and the emphasis is mine.

Since the start of 2008, UK inflation has exceeded the 2% target set by the Government in 34 of the past 40 months and averaged 3.2%. That means that the United Kingdom is now three years into a SOTI episode, as defined above. This is longer than the majority of the other SOTI episodes considered.

Having gone to a lot of trouble to invent a new phrase for persistent inflation way over target the Bank of England then finds its new euphemism so uncomfortable it has to convert it into an acronym, SOTI! The conclusion of the report is also very uncomfortable for the Bank of England as it is exactly the opposite of what it keeps telling us.

http://www.mindfulmoney.co.uk/wp/shaun-richards/inflation/

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King said inflation would “probably” be below the Government’s inflation target of 2 per cent if it was not or increases in VAT, energy prices and import prices.

King said inflation would "probably" be below the Government's inflation target of 2 per cent if it wasn't for the cost of everything going up.

Couldn't make it up.

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Business guy on Fivelive just hinted at this stating that inflation is above target despite IRs being at the lowest levels ever for 2 years.

RPI includes mortgage payments. Thus an increase in interest rates will push up RPI dramaitcally.

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Ok, inflation is running at 4.5% and this is clearly well above target. However, the economy is as fragile as an egg shell despite the fact that the 'cuts' haven't begin yet.

So put yourself in his shoes and ask what he should do?

Raise interest rates to stave off inflation so crashing the housing market, the banks, and the economy, resulting no doubt in a sovereign default. I can't see he has any choice but to leave the rate at 0.5% (or very near to) because to do anything else would make the proverbial hit the fan sooner than it would othewise do so.

It seems a little bit vindictive to want to crash the entire economy just so we can see our MEW'ing neighbours crying into their gruel. In fact it downright stinks.

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It does sort of make sense.

Low interest = low mortgages, low cost of borrowing, low opportunity cost = low rents, more money to spend in the retail sector.

Raising rates would harm almost everything, but it would drop house prices.

I think it is very clear that the main goal of the BoE is to inflate away as much debt as possible and to devalue the pound in line with every other major currency around the world. Everyone is devaluing and inflating at the same time, thus deleting debt with the least pain to the indebted and most pain to the creditors.

2yr: 3.5%, 3yr: 4%, 5yr: 4.6%. 2 year tracker: 2.5%

So - would you pick a fixed or a tracker mortgage? Fix for how long?

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  • 292 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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