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August 2014 Inflation Report

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Release of report and press conference at 10:30am.

Streamed live here: http://streamstudio.world-television.com/CCUIv3/frameset.aspx?ticket=117-118-14748&target=en-default-&status=preview&browser=ns-0-0-0-14-0&stream=flash-video-400

There is likely to be considerable focus on the timing of interest rate rises in relation to wage growth.

Wages falling, savings falling, house prices rising....

We are in for a real s**t storm.

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Houses the most affordable ever then (green line) but linked to CURRENT repayments at near ZIRP. A bit misleading and has no bearing on the principal or the likely lifetime costs of the debt.

Edited by crashmonitor

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On page 34 of the IR there's a discussion of measures of wages. The Bank has finally acknowledged that compositional effects in the workforce can have a significant bearing on earnings growth.

They also conclude that the Average Weekly Earnings series (AWE) is the most comprehensive indicator.

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Carney trying to wriggle out of being called clueless. Whoever was asking him that is obviously frequents this site.

It was Larry Elliott, economics editor of the Guardian.

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Carney would not answer the Daily Mail's simple question:

Q) Does this mean that interest rate rises will be more likely this year or next?

A) Committee will meat again in September.

Telegraph online headline is that Carney said that IRs will not good up this year.

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Household consumption has also remained strong, with consumer confidence high despite continued weakness in real wages.

The ZIRP delusion.

Globally, marked rises in financial market volatility and corrections in asset prices, perhaps associated with a normalisation in US monetary policy, pose significant downside risks.

Yup. Get the popcorn in for that first US rate rise.

Productivity growth has shown few signs yet of a recovery and is now projected to pick up more slowly than anticipated in May.

Unexpected.

Together with the legacy of the financial crisis and broader global forces, this meant that Bank Rate was expected to remain below average historical levels for some time to come. It remained the case, however, that the actual path for monetary policy, even after the first rise in Bank Rate, would remain dependent on economic conditions. In other words, the Committee’s guidance on the likely pace and extent of interest rate rises was an expectation, not a promise.

The new forward guidance model.

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Interesting CPI chart and note. The report is quite relaxed about CPI going lower in the short term and then picking up due to reduced slack and wage pressure.

Now in the past would there not be more QE or are they happy to let CPI drop towards zero and wait for the wage inflation to feed through? Seems risky as extra income might just end up paying down debt and interest payments.

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So much verbal effluennt from these crooks in suits. Their who interest rate setting could be defined by one simple equation.

Bankrupt of England base rate = FED base rate.

Why are these crooks being paid a penny for their thoughts. Outright fraud.

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QE doesn't appear to achieve much

Other than allowing the government to have a year of sub-prime lending at low interest rates, suppressing savings rates, so the bankers/rich can line their pockets at all our expense.

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QE doesn't appear to achieve much

Other than allowing the government to have a year of sub-prime lending at low interest rates, suppressing savings rates, so the bankers/rich can line their pockets at all our expense.

Diminshing returns but that won't stop them trying again. Abenomics is next, QE on steroids. When that fails (see Japan) then we default/hyperinflate. By the time we get to that the world's least capable central banker will have disappeared, as I suspect will Cameron.and Osborne. Handsomely rewarded by the banking interests they fought tirelessly to uphold.

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The BoE has halved its 2014 forecast for wage growth to 1.25%, but there's still jam tomorrow: they project earnings growth of 3.25% in 2015 and 4% in 2016.

Mortgage approvals for house purchase are expected to pick up to 75,000 per month by Q4 2014 (from the present 67,000), but house price growth will begin to slow and will be down to a mere 0.5% per month by Q1 2015 (positively sluggish - I hope George won't be upset).

Judging by the market reaction to the report, it looks as though 2-year fixed mortgages will be getting even cheaper over the next few weeks.

It's like Alice in Wonderland: "As long as you're getting poorer, we'll do our best to make houses cost more for you. Only when you're getting richer can we allow them to cost less."

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