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Shadow Mpc - No Change In Interest Rates

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Shadow MPC: http://www.economicsuk.com/blog/000263.html#more

A summary for you (With a quotation by those who said no change):

NO CHANGE - Roger Bootle "The case for a reduction in UK rates remains very strong"

RAISE 0.25% - Tim Congdon

NO CHANGE - Ruth Lea "no strong case for a cut in interest rates"

NO CHANGE - Andrew Lilico "justify a rate cut, rather than a rise"

NO CHANGE - Kent Matthews "the next step in interest rates should be a rise"

CUT 0.5% - Patrick Minford

RAISE 0.25% - Gordon Pepper

NO CHANGE - David B Smith "little scope for reducing interest rates", "sterling could be destabilised by higher interest rates overseas"

CUT 0.25% - Peter J Warburton

Edited by Jason

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Patrick Minford

Editor of the Liverpool Investment Letter. An author of books and articles on exchange rates, unemployment, housing and macroeconomics; and a regular columnist in the Daily Telegraph. He created the Liverpool Models of the UK and world economies, on which the Letter's analysis is based. Since 1997 he has been Professor of Macroeconomics at Cardiff Business School. Previosuly he was professor of economics at Liverpool University from 1976. From 1992 to 1996 he was a member of the UK Chancellor's Panel of 'Wise Men'. [my bold]



What could he be scared of I wonder?

Edited by Starcrossed

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Known Patrick, I am somewhat surprised that he's out of step with everyone. I can see what he aims to achieve with his action (avoid a recession) and what he is trying to avoid (a recession) I just cannot see how that cut will avoid it.

Actually after reading the blog I can see that he is wrong. He wants to increase demand but with everyone already overborrowed any cut won't have the impact he believes it will (simply because while central rates may be cut, the increased risk in consumer lending at the moment will ensure that the cut would not be passed on to the general public). Hence while such a cut would have an effect the only place it would be seen would be in a Banks profit and loss account.

Edited by eek

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Given that there seems to be a lot of difference of opinion, it appears to me we are at a crossroads - all of the possibilities are credible.

This makes me suspect that IRs are going to stay where they are until it becomes clearer which of the theories most clearly matches what is happening in the real world.

If in doubt, do nothing, seems a good motto at the moment.

Whilst it is very easy to get over-indebted these days, very few people are that stupid. The vast majority are not being crippled by debts - the vast majority are very sensible and won't be foot loose and fancy free with their families security.

My only take on this is that people are being sensibly cautious at the moment, due to increases in energy prices - electricity, gas, oil, + petrol + council taxes etc. Mortgages have gone up over the past couple of years.

These are things people have no option but to pay up for - you can put off buying clothes, but not the essentials of life.

I have a gut feel this 'stability' may last a long time - and that includes house prices.

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I have a gut feel this 'stability' may last a long time - and that includes house prices.

That's actually why I think house prices will fall. If no one is taking a risk and no one is buying those that have to sell will have to reduce their prices to sell.

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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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