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Rising Inflation Is 'no Barrier To More Quantitative Easing'

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http://www.telegraph.co.uk/finance/economics/8754753/Rising-inflation-is-no-barrier-to-more-quantitative-easing.html

A rise in inflation next week is unlikely to dampen the chances of a second round of quantitative easing from the Bank of England's Monetary Policy Committee, according to leading economists.

Annual inflation on the official measure – the Consumer Prices Index – is forecast to rise to 4.5pc in August from 4.4pc in July.

Scottish Power raised both its gas and electricity prices at the beginning of last month, which is expected to feed through to the CPI.

"The ongoing squeeze in households' real incomes is the worst since the mid-1970s and a major source of consumer disgruntlement," said Simon Hayes, economist at Barclays Capital.

The data, to be published by the Office for National Statistics on Tuesday, will not be welcomed by the MPC which has repeatedly failed to meet its 2pc inflation target.

The situation is expected to worsen further in the coming months with inflation nearing 5pc.

Bit the 2% target is always in the future and the MPC is always on tract to meet that target, we just never get to that future point.

I'm relieved that rampant inflation isn't a threat to more free funny money which will of course cause more inflation.

More printy printy coming to a bankrupt nation near you soon.

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Exactly-and 5 year swap rates are at 1.7% !!

No one with any brains is fooled by the use of some of the printing to reduce interest rates on the debt.

And it won't stop the real economy being utterly eviscerated either.

The BoE has one trick, which is to print money. They'll never stop voluntarily.

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They've got some room to move yet, the 10 year bonds are yielding just 2.27%.

You can't argue with a hyperinflationist.

Joe Walsh

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No one with any brains is fooled by the use of some of the printing to reduce interest rates on the debt.

I guess my point was that predictions on runaway inflation may be a little wide of the mark, that's all.

Even if you disagree, there's no need to be offensive. If you want to compare brains or intellect you'll quickly come unstuck ;)

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I guess my point was that predictions on runaway inflation may be a little wide of the mark, that's all.

The problem with using market interest rates to predict inflation is that it assumes an efficient rational market free of distortion. At the moment the bond market is heavily distorted by central banks buying bonds, or proposing to, such that bonds are priced ready for sale to central banks not priced in the way they might be if a return ahead of inflation was required.

(Although if central banks weren't buying the bonds, we wouldn't have inflation... OK I've confused myself now :lol: )

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I guess my point was that predictions on runaway inflation may be a little wide of the mark, that's all.

You didn't mention inflation.

Even if you disagree, there's no need to be offensive. If you want to compare brains or intellect you'll quickly come unstuck ;)

Well, offensive would be something like "you're a ******ing moron" imo.

But no one with any brains is fooled by the government using newly created money to hold down interest rates.

If you were fooled and this offended you, I'm sorry about that.

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The problem with using market interest rates to predict inflation is that it assumes an efficient rational market free of distortion. At the moment the bond market is heavily distorted by central banks buying bonds, or proposing to, such that bonds are priced ready for sale to central banks not priced in the way they might be if a return ahead of inflation was required.

(Although if central banks weren't buying the bonds, we wouldn't have inflation... OK I've confused myself now :lol: )

They are printing to cover up the commercial banks various frauds, and to fund the state.

Because doing this is inherently risky and therefore private investors want high IR, they are using some of the new cash to hold down interest rates, meaning they don't have to print quite as much, extending the life of the bankrupt commercial banks and the bankrupt nation states.

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They are printing to cover up the commercial banks various frauds, and to fund the state.

Because doing this is inherently risky and therefore private investors want high IR, they are using some of the new cash to hold down interest rates, meaning they don't have to print quite as much, extending the life of the bankrupt commercial banks and the bankrupt nation states.

100% CORRECT, GUARANTEED.

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I guess my point was that predictions on runaway inflation may be a little wide of the mark, that's all.

The thing is rates today have absolutely nothing to do with inflation expectations. If anything quite the opposite.

Edited by _w_

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Through each round of QE rates actually rose quite substantially. As there was the expectation of more inflation than otherwise down the road and that there would be more economic activity, so opportunity for other places to put money besides national bonds.

Each time QE ended the bond yields have fallen way back. Then when Bernanke surprised people and said no QE, the bonds have fallen through the floor.

This last huge move down in yields was clearly money moving from other asset classes into national bonds for safety.

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  • 284 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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