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Us Interest Rates V Uk Interest Rates

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With US interest rates tipped to go up and possibly reach 5% by May 06 how does this effect UK interest rates.

My understanding is that the UK IR's need to stay ahead of the US IR's to remain competitive as the pound would be devalued.

However various commentators and articles seem to think that UK IR's might only go up 0.25% in the next year which would see us overtaken by the US IR's. Are they being incompetent or is their circumstance where this works for the UK?

As a corollary of this why would US inflation go up but the UK inflation stay manageable - thus allowing UK to keep IR's down?

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As a corollary of this why would US inflation go up but the UK inflation stay manageable - thus allowing UK to keep IR's down?

Because British and American governments fiddle the inflation figures in different ways?

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Because British and American governments fiddle the inflation figures in different ways?

Just like they fiddle with their willies in differents ways, which determines whether they rise or fall...

:o

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Maybe someone in the US has worked out that the money pump with Asia is destroying the US economy and is do more to help produce very credible adversary within decades than it is to the US economy. Maybe the banks have enough debt on their books and have said OK chaps can we start charging the suckers more, maybe there are real concerns about how the USD will remain the reserve currency whilst it is being further debased.

Whatever the reason if somebody wants rates to go up they will go up just as they went down when somebody wanted them down.

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With US interest rates tipped to go up and possibly reach 5% by May 06 how does this effect UK interest rates.

My understanding is that the UK IR's need to stay ahead of the US IR's to remain competitive as the pound would be devalued.

However various commentators and articles seem to think that UK IR's might only go up 0.25% in the next year which would see us overtaken by the US IR's. Are they being incompetent or is their circumstance where this works for the UK?

As a corollary of this why would US inflation go up but the UK inflation stay manageable - thus allowing UK to keep IR's down?

Over the last 25 years UK rates have, on average been between 0.5% and 1.5% above US base rates. Quite often nearer the 1.5% than the 0.5%.

Twice in the last 25 years UK base rates have fallen below US rates. On both occasions the market 'corrected' the imbalance within a few months.

How so-called ecnomists seriously think we can drop IRs back to 3.5% to get us out of trouble again (i.e. by getting people to borrow to spend again so our debt can go up to 2 trillion instead of 1.1) really puzzles me. If they do this there will be a run on the pound which will cause high inflation (as many of our imports are priced in US dollars).

The government/BOE etc are between a rock and a hard place. Put rates up and already faltering economy implodes as consumer spending falls even more - put rates down and watch a run on the pound and high inflation - which will require a sharp burst of much higher IRs to correct.

This is why this country and economy is doomed. It's a house of cards built on borrowing.

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Pound's been going down against the us dollar since Thursday -about 3 cents now. also down marginally against the euro.

Heh heh heh. Some more inflation for us there then, seeing as we import almost everything and oil is priced in dollars.

I reckon some of the MPC will vote to raise rates this month, the outcome will very likely be a hold, but when the minutes come out it will send a clear signal to the markets and will be the obvious direction following Mervyn and co's Hawkish comments.

:D

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Just like they fiddle with their willies in differents ways, which determines whether they rise or fall...

:lol: Well I very much doubt Greenspan could breathe any life into his 80-year old tool.... :lol:

Edited by Warwickshire Lad

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Although the BOE is expected to keep rates at 4.5% at this Thursday’s meeting, any additional economic news of this nature will put unbearable pressure on the bank to lower rates soon which in turn would produce further selling in the pound."

The £ is close to getting flushed as it is!!!!!

USDGBP.gif

post-273-1131375187_thumb.jpg

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Maybe someone in the US has worked out that the money pump with Asia is destroying the US economy and is do more to help produce very credible adversary within decades than it is to the US economy. Maybe the banks have enough debt on their books and have said OK chaps can we start charging the suckers more, maybe there are real concerns about how the USD will remain the reserve currency whilst it is being further debased.

Whatever the reason if somebody wants rates to go up they will go up just as they went down when somebody wanted them down.

You'd think our Tony would be able to say to his mate Georgy - 'look we helped you out on the Iraq thing - what about you keeping IRs down for another few years - at least until the end of your second term - I'll be out of it by then and the Scottish Clown can take the blame.'

The £ is close to getting flushed as it is!!!!!

I'd forgotten we've had a recent period of sterling being so high against the dollar. So we've already enjoyed the low inflation that brought. Now, if we start to head back towards what someone told me was the norm of about 1.60 - we will have a nice burst of inflation to cope with.

Tee hee.

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You'd think our Tony would be able to say to his mate Georgy - 'look we helped you out on the Iraq thing - what about you keeping IRs down for another few years - at least until the end of your second term - I'll be out of it by then and the Scottish Clown can take the blame.'

Do you think the UK's "special relationship" has had any material effect in the decision processes of US multinationals when deciding which of the most expensive plants to shut down around the world - I think you will find the answer buried n those stats.

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Pound's been going down against the us dollar since Thursday -about 3 cents now. also down marginally against the euro.

How low does the pound have to fall before the UK begins "importing inflation"?

Is there a £ value at which the BoE would "have" to put up rates to shore up the currency?

L

(macroeconomics dunce :unsure: )

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The £ is close to getting flushed as it is!!!!!

Only Me,

Why that point on your graph?!?!

I presume we are talkinga round 1.72/3?

Whats important about that price? :blink:

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Only Me,

Why that point on your graph?!?!

I presume we are talkinga round 1.72/3?

Whats important about that price? :blink:

Chart support - it is a level which has held a few times, beneath that level there is nothing on the chart to provide support, the £ whooshed up to the 1.70's and then onto the 1.90's. If that support level breaks then there is the possibility that it gets driven all the way back down to teh 1.50's again in just as quick a time. Would be a pretty symmetrical pattern too, markets seem to like symmetry.

Here's a more thorough explanation that I picked off google...

http://www.cleartrade.com/?pageid=35047

:::::>Support and Resistance

Support and resistance lines are horizontally projected price levels obtained from patterns such as double tops and bottoms. Resistance shows where sellers will not sell higher prices and buyers want to take profit. Support shows where buyers will not buy lower prices and sellers want to take their profit. In an uptrend, the resistance levels represent pauses in the uptrend which serve to temporarily halt the price advance. (Vice versa for support lines).

Support and resistance levels reverse roles once they are decisively broken. If price penetrates a resistance level, then it will generally move upward to the next resistance level. The previous resistance level now becomes support. The longer prices trade near a support or resistance level, the more significant that level becomes.

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Do you think the UK's "special relationship" has had any material effect in the decision processes of US multinationals when deciding which of the most expensive plants to shut down around the world - I think you will find the answer buried n those stats.

Whoops! I think you thought I was being serious!

I could see George taking Tony by the elbow as he guides him out of the room; 'Hell Tony it's a tough world out there but America has to look after her own interests first. Why if we don't have a healthy economy we'll take everyone down with us!'

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Chart support - it is a level which has held a few times, beneath that level there is nothing on the chart to provide support, the £ whooshed up to the 1.70's and then onto the 1.90's. If that support level breaks then there is the possibility that it gets driven all the way back down to teh 1.50's again in just as quick a time. Would be a pretty symmetrical pattern too, markets seem to like symmetry.

Here's a more thorough explanation that I picked off google...

http://www.cleartrade.com/?pageid=35047

:::::>Support and Resistance

Support and resistance lines are horizontally projected price levels obtained from patterns such as double tops and bottoms. Resistance shows where sellers will not sell higher prices and buyers want to take profit. Support shows where buyers will not buy lower prices and sellers want to take their profit. In an uptrend, the resistance levels represent pauses in the uptrend which serve to temporarily halt the price advance. (Vice versa for support lines).

Support and resistance levels reverse roles once they are decisively broken. If price penetrates a resistance level, then it will generally move upward to the next resistance level. The previous resistance level now becomes support. The longer prices trade near a support or resistance level, the more significant that level becomes.

OK cool - I understand

:rolleyes:

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All

Sent an email to blingite David Smith he sent me an email back saying "The USA required

higher rates to combat inflationary pressure and there would be no effect on the UK"

He claims to have degrees from LSE more like from the Scum offers section and send the

tokens to New Labour Polytechnic.

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All

Sent an email to blingite David Smith he sent me an email back saying "The USA required

higher rates to combat inflationary pressure and there would be no effect on the UK"

He claims to have degrees from LSE more like from the Scum offers section and send the

tokens to New Labour Polytechnic.

So he is saying the UK will be protected from inflation???

Does not sound logical or likely if my assumption is correct.

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So he is saying the UK will be protected from inflation???

Does not sound logical or likely if my assumption is correct.

Poor Dave's been banging the lower interest rate drum for a while now. He previously stated in January that we would be looking at 1.75% CPI for the end of the year, at present were hovering around 2.5%.

Quote:

http://www.economicsuk.com/blog/2005_01.html

"Will inflation stay low?

Yes. There are two views about inflation. One is that it will take off if spare capacity is used up, particularly in the labour market, unless action is taken to slow the economy. The other, which I tend towards, is that low inflation is now ingrained and that it will take a lot to rekindle it. Britain has had low inflation (averaging 2.5% on the Bank’s former target measure) for 12 years. On the new measure, the consumer price index, inflation will still be below its 2% target at the end of the year, probably at about 1.75%."

Despite the upward spiral of CPI he is still convinced that it doesn't pose a problem...

Quote:

http://www.economicsuk.com/blog/

"Inflation on the horizon? No, it's just a mirage"

In addition, David joins a group of economists who are under the presumption that the BOE target growth rather than inflation.

Quote: our beloved Mervy King (god bless him...)

"I think a number of people in the last six months have been talking as if the MPC were targeting total demand or, even more oddly, targeting retail sales and consumer spending," King said.

"We are not. We are trying to target inflation. We have an inflation target."

Rather sounds like a swipe at the David Smith crowd?...

;)

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Chart support - it is a level which has held a few times, beneath that level there is nothing on the chart to provide support, the £ whooshed up to the 1.70's and then onto the 1.90's. If that support level breaks then there is the possibility that it gets driven all the way back down to teh 1.50's again in just as quick a time. Would be a pretty symmetrical pattern too, markets seem to like symmetry.

Chartwise this is what Society General were saying saying this morning;

"The cross is oriented to the downside. It is under its 50-day moving average located at 1.79 GBP. The 20-day moving average (lower than the 50-day moving average) is maintaining the prices under medium-term sell pressure. Our first support is at 1.73 GBP and the next is at 1.71 GBP; the resistances, located at 1.82 GBP and at 1.84 GBP must be exceeded for the trend to undergo a reversal.

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How low does the pound have to fall before the UK begins "importing inflation"?

Is there a £ value at which the BoE would "have" to put up rates to shore up the currency?

L

(macroeconomics dunce :unsure: )

I was wondering this also - the arguements put all seem logical, but I then looked back at exchange rates over the past few years [see attachment] and see that the pound has been much weaker in relation to the dollar eg. around the 1.5 level throughout the mid-late 90's, but inflation was relatively low - could anyone explain?

J (another macroeconomics dunce :-) )

GBPUSD.gif

post-2675-1131384727_thumb.jpg

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I was wondering this also - the arguements put all seem logical, but I then looked back at exchange rates over the past few years [see attachment] and see that the pound has been much weaker in relation to the dollar eg. around the 1.5 level throughout the mid-late 90's, but inflation was relatively low - could anyone explain?

J (another macroeconomics dunce :-) )

GBPUSD.gif

Its where you start from and where you are going that counts and also what is happening with prices relative to all currencies during the big moves that counts. If there is inflation in the system and you have a high valued currency (relatively) that falls against the major currency used for purchasing goods and commodities you get the double whammy of both effects.

The last time there was a big bout of inlfation in the uk (housing excepted, oh and services and heat light and power) was when the inflationary period of the late 80's combined with the £ being dumped out of the ERM - hence the high rates then.

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Its where you start from and where you are going that counts and also what is happening with prices relative to all currencies during the big moves that counts. If there is inflation in the system and you have a high valued currency (relatively) that falls against the major currency used for purchasing goods and commodities you get the double whammy of both effects.

The last time there was a big bout of inlfation in the uk (housing excepted, oh and services and heat light and power) was when the inflationary period of the late 80's combined with the £ being dumped out of the ERM - hence the high rates then.

Cheers - clearer now :-)

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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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