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GloomMonger

Deflation Here We Come!

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Inevitable I suppose

http://uk.news.yahoo.com/banks-fisher-defends-low-rates-despite-inflation-081351782.html

LONDON, June 21 - Economic recovery remains fragile and more quantitative easing could yet be needed if deflation becomes a risk, Bank of England policymaker Paul Fisher said on Tuesday.

Britain's recovery is struggling to gain traction after a shock contraction at the end of last year. Consumers, hit by high inflation and rising taxes, are economising and signs of a slowdown in key export markets have emerged.

Fisher's comments follow a dire outlook from Bank of England governor Mervyn King, who warned last week about tough years ahead as the economy readjusts following the bust of the credit-fuelled housing bubble.

"If we get stuck in a deflationary rut it's not clear we have sufficient ability to get out of that quickly," Fisher said.

"I've said in the past it (QE) is still very much on the table as one of our potential policy actions, and it's certainly not ruled out, and people need to be aware of that."

Only one member of the Bank's policy panel, Adam Posen, has voted in favour of expanding the QE programme to pump more money into the UK economy since March 2009. Minutes of June's meeting, due on Wednesday, are not expected to show another member voting in favour.

However, markets will try to discern whether the balance on the panel has shifted even further towards the low-rates camp after the departure of arch-hawk Andrew Sentance.

Financial markets have pushed back rate hike bets well into next year as the economy struggles and some economists even see the key rate unchanged at its record low of 0.5 percent until 2013.

Hefty government spending cuts are depressing consumer morale, and data on Tuesday showing a weak start to the public finances in the 2011 fiscal year suggest the government has little option but to press ahead with its plans.

A monthly survey from the CBI employers' lobby showed that manufacturers slightly eased their expectations of future production despite a surprisingly strong rise in order books in June.

FISHER DEFENDS LOW RATES

Fisher was taking questions after a speech at a bond market conference hosted by Euromoney in London, in which he defended the Bank's policy of keeping rates at rock-bottom despite inflation running at more than double its two percent target.

Fisher admitted the central bank had underestimated the risk to inflation in recent years, but said it was hard to argue that policy should have been set differently. "The MPC are trying to set the best path back to the inflation target, but even the best path is an extremely uncomfortable one," he said.

The central bank has been criticised for its poor track record in forecasting inflation. Inflation has been above target for much of the past five years and is expected to hit 5 percent later this year.

Fisher said there were risks on both sides, but low growth and deflation could be a more intractable problem.

"On one side, higher inflation expectations could become entrenched making it very costly for the MPC to subsequently bring inflation back to target," he said.

"On the other side, the economy could be much weaker than we expect, pushing down on inflation and risking deflation. Recovering to the target from that could be even harder -- at least in my personal view."

Interest rates have stood at a record low of 0.5 percent since March 2009 and the Bank appears in no rush to raise them. Money markets show investors are not fully pricing in a 25 basis point rate rise until July 2012.

Fisher is considered one of the more dovish members of the nine-member Monetary Policy Committee.

Edit to add quote

Edited by GloomMonger

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This kind of fits nicely with either losing a load of money on a Greece default or having to bail them out (throwing good money after bad) they can then print the lost money and pretend like nothing ever happened while all of us peons pay £5 for a loaf of bread.

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Fisher's comments follow a dire outlook from Bank of England governor Mervyn King, who warned last week about tough years ahead as the economy readjusts following the bust of the credit-fuelled housing bubble.

Never!

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I thought the BOE's job was to control inflation..............but the answer to inflation seems to be to get the presses fired up yet again.

oh dear....

maybe the BOE should change their policy and try to get inflation as high as possible, or is that what they are doing? i doint know anymore, all doomed,

lets hope more QE inflation as high as possible :P

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Fisher admitted the central bank had underestimated the risk to inflation in recent years, but said it was hard to argue that policy should have been set differently. "The MPC are trying to set the best path back to the inflation target, but even the best path is an extremely uncomfortable one," he said

Oh do come off it.

It's extremely easy to argue that policy should have been set differently - unless you belong to the government or the Bankrupt of England.

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and more quantitative easing could yet be needed if deflation becomes a risk

In other news, a giant steel umbrella is being constructed over the Olympic stadium in case falling meteorites become a risk to the athletes.

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What is depressing consumer morale is them not bloody cutting anything when the majority of the country voted for cuts. If I was paying less tax I would go out and spend more, same with everyone else. Instead our cost living is extortionate in order to fund a wasteful unproductive public sector and the servicing of a huge debt etc. The country is isn't spending because they think the debt is going to get bigger and things are going to get worse (greece).

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Fisher's comments follow a dire outlook from Bank of England governor Mervyn King, who warned last week about tough years ahead as the economy readjusts following the bust of the credit-fuelled housing bubble.

"If we get stuck in a deflationary rut it's not clear we have sufficient ability to get out of that quickly," Fisher said.

and if we get in an inflationary rut they've already conclusively proved they have insufficient ability to get out of that quickly - or ever for that matter.

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I thought the BOE's job was to control inflation..............but the answer to inflation seems to be to get the presses fired up yet again.

oh dear....

Nah, the bank of Englands job is to bankrupt the UK's working/middle class so they will cry out for a NWO and a one world currency. Carry on printing Merv.

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Hmm.

Maybe we should print up a couple of hundred billion and buy the Greek coast.

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PRINTY PRINTY

You said it.

The BoE will happily ride roughshod over the economy with inflation but deflation will not be allowed.

Yee-ha cowboy!

Rolling, rolling, rolling

Though the money supply is swollen

Keep them presses rolling

Rawhide

Edited by MrFlibble

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The Fed is considering extending it's operations to at least Oct (I presume they just mean this year) as the economic data isn't looking good. Market corrections are not allowed in the free market.

Free market? I seem to remember reading about those in history.

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Listen to me, if Merv want me to spend, he can give me some of the printy printy and I'll treat myself.

Or why not let us all just print our own. Cut out the middle man so to speak........

"Yes dear, we could be doing with a new 4x4, fitted kitchen and 60" LED TV. I'll just pop up stairs and get the printer going. 30k should do us I think."

:lol:

Edited by Wait & See

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Consumers, hit by high inflation and rising taxes, are economising and signs of a slowdown in key export markets have emerged.

And how exactly is QE going to help that?! :blink:

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This kind of fits nicely with either losing a load of money on a Greece default or having to bail them out (throwing good money after bad) they can then print the lost money and pretend like nothing ever happened while all of us peons pay £5 for a loaf of bread.

£5 or 0.01 gold grams.

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What is depressing consumer morale is them not bloody cutting anything when the majority of the country voted for cuts. If I was paying less tax I would go out and spend more, same with everyone else. Instead our cost living is extortionate in order to fund a wasteful unproductive public sector and the servicing of a huge debt etc. The country is isn't spending because they think the debt is going to get bigger and things are going to get worse (greece).

Yep you can't spend money you don't have.

And few people understand that in order to make money yourself, you need other people to have lots of money to spend.

You could have a great business idea and find people eager to work for you, but if all your potential customers are flat broke, it doesn't matter.

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http://www.telegraph.co.uk/finance/economics/8588880/BoE-policymaker-Paul-Fisher-More-QE-could-be-needed.html

Britain's economic recovery remains fragile and more quantitative easing could yet be needed if
deflation
becomes a risk, BoE policymaker Paul Fisher said on Tuesday.

The "D" word does seem to strike terror into many a heart on here yet it is the best antidote for bubblitus. When the bubbles pop they deflate and there are a lot of bubbles that are about to deflate.

Collapsing demand and wages will eventually curb price increases and then the unexpected will be here. After all, we are in the era of the unexpected.

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  • 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%



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