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Cbi Predicts Rate Rise To 0.75% In Early 2015

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http://www.bbc.co.uk/news/business-27361169



"UK interest rates will rise to 0.75% from 0.5% in the first three months of 2015 as growth picks up, according to a prediction from the CBI."



a 50% increase in interest rates ( or next to nowt if you are a saver ).



Buy now before you miss out on those cheap debt deals.....or wait for those cheap house deals.


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WTF?

they use interest rates to control overheating, AKA inflation.

Is that what they REALLY expect to happen in 6 months.

With small business earnings plummeting?...According to a seminar I attended this weekend, several major manufacturers are seeing a severe decline in Hi Tech spending in the classroom as things they have brought in to each class have been found to be just about useless in the education of kids/....new products abound, but which standards, if any will dominate....is education getting better?

These guys were talking about Government spending as THE major driver for their businesses ( a common theme among the presentations).....Austerity?....never happened...they will waste billions on useless tech rather than actuall get things done properly....

This wont lead to inflation....it will lead to destruction of waste piled on waste....with a dwindlng SMB base being asked to pay for it.

Edited by Bloo Loo

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WTF?

they use interest rates to control overheating, AKA inflation.

Since when ? Theyve not used interest rates to control anything in the last 5 years.They've set them at a level to try and avoid deflation which has pushed more and more people nearer the edge...which will cause deflation.

The UK will raise interest rates when the US does it. I expect we will see a report this week saying the UK to raid rates by October.

When that happens there will be a lot of people in a lot of trouble.

Say ta ta to that £50K mum and dad funded deposit.

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Since when ? Theyve not used interest rates to control anything in the last 5 years.They've set them at a level to try and avoid deflation which has pushed more and more people nearer the edge...which will cause deflation.

The UK will raise interest rates when the US does it. I expect we will see a report this week saying the UK to raid rates by October.

When that happens there will be a lot of people in a lot of trouble.

Say ta ta to that £50K mum and dad funded deposit.

thats the other reason.

US isnt overheating either..

The real issue is hidden.

It is that many institutions taking subscriptions from punters needing to pay out a return at a guaranteed rate ( pension funds, insurance) are forced to hold instruments of a certain nature.

These instruments bought in to cover periods of 10 years or so...currently, we have been in the loosening for about 5 years and these organisations now have 5 years worth of very poor returning instruments producing little or nothing other than a return of the capital, but these guys are being asked, indeed, have to provide a return that covers firstly their costs, then their profit and finally to cover the events they are contracted to.

If rates dont rise, there is going to be a major shortfall in every area, profit, cover of costs and the product return.

They have no choice if they are to avoid a total systemic collapse in 2018/19

Growth is irrelevent.

IMHO.

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It is that many institutions taking subscriptions from punters needing to pay out a return at a guaranteed rate ( pension funds, insurance) are forced to hold instruments of a certain nature.

These instruments bought in to cover periods of 10 years or so...currently, we have been in the loosening for about 5 years and these organisations now have 5 years worth of very poor returning instruments producing little or nothing other than a return of the capital, but these guys are being asked, indeed, have to provide a return that covers firstly their costs, then their profit and finally to cover the events they are contracted to.

If rates dont rise, there is going to be a major shortfall in every area, profit, cover of costs and the product return.

You seem to be suggesting that institutions with long term fixed commitments (e.g. annuity providers) have chosen not to back them with long term gilts of a similar maturity, even though these appear to be available, but have instead chosen to back them with gilts of a shorter maturity. In other words, short term funding for long term business.

What reason is there for thinking the institutions have employed such an exceptionally risky strategy?

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The issue is that these guys are constantly paying out..they arent starting from 2009.

They have had 5 years or more of low returns.....they are being strangled. Whatever the length of their purchases, they are paying out today, they have paid out since the easing began, and they are needing to pay out for the foreseeable.

Low rates will be cutting into future returns, whatever their strategy...and that means no payouts, bankruptcy and tanks on the streets as the great unwashed dont get their promised packages met.

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WTF?

they use interest rates to control overheating, AKA inflation.

Is that what they REALLY expect to happen in 6 months.

With small business earnings plummeting?...According to a seminar I attended this weekend, several major manufacturers are seeing a severe decline in Hi Tech spending in the classroom as things they have brought in to each class have been found to be just about useless in the education of kids/....new products abound, but which standards, if any will dominate....is education getting better?

These guys were talking about Government spending as THE major driver for their businesses ( a common theme among the presentations).....Austerity?....never happened...they will waste billions on useless tech rather than actuall get things done properly....

This wont lead to inflation....it will lead to destruction of waste piled on waste....with a dwindlng SMB base being asked to pay for it.

Not much prospect of CPI trending above 2% imo before 2016. We have a strong pound, there is a worldwide commodites glut. The wheels are falling off the inflationary props...artificially high food prices to support our farmers are coming unstuck on Euro and US food mountains especially dairy. Gas and electicity wholesale prices are in cataclysmic freefall. The only thing keeping the deflationary wolf from the door is service sector inflation connected to a house price boomlet and indirect taxation, otherwise we would be in the same deflationary nightmare as the Eurozone.

But if house prices continue their fantasy moves, when the rest of the economy (and the majority of the advanced world) is in a deflationary debt spiral then the MPC have no choice but to raise rates.

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2012 Pension pot £17900. Annual pension forecast £940.00

2013 Pension pot £20500. Annual pension forecast £818.00

:lol:

Should buy me a half decent 2nd hand motor or 6 bags of sugar in 2034.

Lucky i've not given these bastards any new dosh for 10 years.

Something will have to give.

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http://www.bbc.co.uk/news/business-27361169

"UK interest rates will rise to 0.75% from 0.5% in the first three months of 2015 as growth picks up, according to a prediction from the CBI."

a 50% increase in interest rates ( or next to nowt if you are a saver ).

Buy now before you miss out on those cheap debt deals.....or wait for those cheap house deals.

Thought I would spin up some daily mail headlines for 6 months time to save them the effort.

"Cost of government borrowing set to soar"

"Taxes set to soar as the cost of government rockets"

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2012 Pension pot £17900. Annual pension forecast £940.00

2013 Pension pot £20500. Annual pension forecast £818.00

:lol:

Should buy me a half decent 2nd hand motor or 6 bags of sugar in 2034.

Lucky i've not given these bastards any new dosh for 10 years.

Something will have to give.

If you converted from fiat to metals, I wonder what you'de be able to buy with the proceeds in 2034?

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2012 Pension pot £17900. Annual pension forecast £940.00

2013 Pension pot £20500. Annual pension forecast £818.00

:lol:

Should buy me a half decent 2nd hand motor or 6 bags of sugar in 2034.

Lucky i've not given these bastards any new dosh for 10 years.

Something will have to give.

Fortunately you can now opt out of a painful shafting from annuity providers and draw your pension savings out post 2015.

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Not much prospect of CPI trending above 2% imo before 2016. We have a strong pound, there is a worldwide commodites glut. The wheels are falling off the inflationary props...artificially high food prices to support our farmers are coming unstuck on Euro and US food mountains especially dairy. Gas and electicity wholesale prices are in cataclysmic freefall. The only thing keeping the deflationary wolf from the door is service sector inflation connected to a house price boomlet and indirect taxation, otherwise we would be in the same deflationary nightmare as the Eurozone.

But if house prices continue their fantasy moves, when the rest of the economy (and the majority of the advanced world) is in a deflationary debt spiral then the MPC have no choice but to raise rates.

I don't see what you see Mr Monitor sir.

I see shrinking packet sizes. Hobnobs the most recent.

I see a standard 6x6 fence panel DOUBLE in price in 2 years.

I see animal feed pack sizes reduced by 25% and the price only by 5%. With the price already heading back to what it was before.

I see an email from the CoOp telling me my electricity is going up.

I hear twonks fromt eh Yorkshire Building society on Pravda this am telling me inflationary pressures are low.

I shout at the radio and go back to sleep.

I could go on.

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Not much prospect of CPI trending above 2% imo before 2016. We have a strong pound, there is a worldwide commodites glut. The wheels are falling off the inflationary props...artificially high food prices to support our farmers are coming unstuck on Euro and US food mountains especially dairy. Gas and electicity wholesale prices are in cataclysmic freefall. The only thing keeping the deflationary wolf from the door is service sector inflation connected to a house price boomlet and indirect taxation, otherwise we would be in the same deflationary nightmare as the Eurozone.

But if house prices continue their fantasy moves, when the rest of the economy (and the majority of the advanced world) is in a deflationary debt spiral then the MPC have no choice but to raise rates.

so again, another possible reason, but not one that involves actual growth of real production.

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Fortunately you can now opt out of a painful shafting from annuity providers and draw your pension savings out post 2015.

Indeed. Im hoping for "Triviality".

But Mr Bloos point is borne out in my last 2 pension statements.

The only place i've seen any deflation lately.

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If you converted from fiat to metals, I wonder what you'de be able to buy with the proceeds in 2034?

I've already done a bit of that.

Not buying any more.

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I don't see what you see Mr Monitor sir.

I see shrinking packet sizes. Hobnobs the most recent.

I see a standard 6x6 fence panel DOUBLE in price in 2 years.

I see animal feed pack sizes reduced by 25% and the price only by 5%. With the price already heading back to what it was before.

I see an email from the CoOp telling me my electricity is going up.

I hear twonks fromt eh Yorkshire Building society on Pravda this am telling me inflationary pressures are low.

I shout at the radio and go back to sleep.

I could go on.

I did say food and fuel were the inflation props, so I am agreeing that food has risen recently General shop prices such as clothes and consumer goods have been in deflation, it will be difficult to keep CPI at 2% if fuel and food deflate too.

Even so food has never taken up such a low proportion of UK disposable income. It really was a problem in the 70s and 80s and you had to seriously budget for it back then, I don't worry about food prices these days.......energy prices, now they are as substantial as they ever were be it domestic heating or petrol.

Food at one time took up half disposable income pre 1900, it has fallen every decade since then.

Edited by crashmonitor

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I did say food and fuel were the inflation props, so I am agreeing that food has risen recently General shop prices such as clothes and consumer goods have been in deflation, it will be difficult to keep CPI at 2% if fuel and food deflate too.

Even so food has never taken up such a low proportion of UK disposable income. It really was a problem in the 70s and 80s and you had to seriously budget for it back then, I don't worry about food prices these days.......energy prices, now they are as substantial as they ever were be it domestic heating or petrol.

Food at one time took up half disposable income pre 1900, it has fallen every decade since then.

Guess it depends on what you eat.

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Guess it depends on what you eat.

The UK chart is very similar to the US. We love to complain about food rises, even as it becomes a smaller and smaller part of our budgets (9% in 2012 from 50% in Victorian times). According to this third lowest spend on food in the world.......

http://www.aei-ideas.org/2013/09/americans-love-to-complain-about-rising-food-prices-here-are-three-reasons-you-should-stop-whining/

Edited by crashmonitor

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But won't HPI be driving CBI member profits!

Hard to see how rates are going to go up considering the national debt. Higher interest rates means more taxes diverted to servicing costs rather than services or to keep the services higher taxes. Do the CBI think that taxes are going to go up?

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But won't HPI be driving CBI member profits!

Hard to see how rates are going to go up considering the national debt. Higher interest rates means more taxes diverted to servicing costs rather than services or to keep the services higher taxes. Do the CBI think that taxes are going to go up?

Are they trying to talk down the market because again everyone's disposable income is going on housing and if prices don't stabilise ( i.e. drop 10% then stop ) soon there will either be another crisis or they really will HAVE to do something about it.

Interesting times at the HPC coal front.

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Well as forward guidance is a total mess who knows? Well it is on the mpc's spare capacity calculations which the committee publicly disagree on.

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The UK chart is very similar to the US. We love to complain about food rises, even as it becomes a smaller and smaller part of our budgets (9% in 2012 from 50% in Victorian times). According to this third lowest spend on food in the world.......

http://www.aei-ideas.org/2013/09/americans-love-to-complain-about-rising-food-prices-here-are-three-reasons-you-should-stop-whining/

Waitrose>Tesco>Lidl.

Lot of Beemers in Lidl these days.

Where next?

You can only change your habits a certain number of times.

You can only shrink a pack of Hobnobs a certain number of times.

I now see adverts actually proclaiming small as good.

This is great, someone has bothered to ask why the actual liquid content has halved, everyone else wants to know what the song is. :lol:

Heres another.

Hey...!! funky happening squash. £2.49 :lol:

Carry on Britain.

If you want to pay £500k for an ex council house in Walthamstow, get ready to be ******ing reamed.

Hard.

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