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TheCountOfNowhere

FED Inflation report tops 2%

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Oh how i would love a rate rise in the UK. That would kill the bubble dead. The sentiment change would be palpable.

UK Gov are starting to get stuck between a rock and a hard place. Keep going in the direction they are and you will soon have some very extreme political parties taking control.

The U.S seems to very slow with their rate rises as they seem to be running their economy white hot. 

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2 minutes ago, jiltedjen said:

Oh how i would love a rate rise in the UK. That would kill the bubble dead. The sentiment change would be palpable.

UK Gov are starting to get stuck between a rock and a hard place. Keep going in the direction they are and you will soon have some very extreme political parties taking control.

The U.S seems to very slow with their rate rises as they seem to be running their economy white hot. 

Now, imagine if UK inflation was taking off and a report saying unemployment was down....

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Wonder what the CPI and RPi will be over the next few months? I can see YoY chugging along at 2.5.3.5 percent, with RPI traditionally being higher.

I think the US will have to force the UK to follow suit at some point but will our BoE be reluctant to raise rates:

Due to Brexit

Due to better growth figures

Surely rising inflation (Count) will have to take precedent over these 2 reasons, in order that the BoE is forced to raise rates?

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Carney has his ducks in a row. First he'll 'look through' any period raised inflation as his predecessor did. He'll also be using the 'Brexit' as a reason to not raise rates for caution. He's never ever raised a rate and isn't going to start now. The only way that'll happen here is if either he's sacked or after he leaves.

I've a strong feeling the Fed will continue to talk till Q3 and then lift a little. Again that'll only change if something seismic happens, maybe Trump sacks Yellan, hope springs eternal.

Its been getting near a decade since people saw credit costs lift, when they do it'll be a massive shock.

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I suspect they will do anything to avoid raising rates. Even if inflation will hit 4-5%, they won't raise.

This 20% drop in the value of the pound is a godsend gift for them, they will wait a few years until this 20% will be reflected in wages so that housing will look 20% cheaper without causing a crash in nominal values, so mortgage holders are not affected. As a side effect all our savings will worth 20% less.

I think that's their intended solution for the housing crisis.

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Carney, Hammond etc. said million times that's how QE works, they pump up asset prices first then the inflation caused by asset prices will spread to other areas and finally wages, that's how it is intended to work. They won't raise rates once this starting to happen, they will rather wait while wages get to a healthy level compared to the new level of nominal house prices, regardless of how big inflation is.

 

Unless a black swan event happens this is what will happen, so better get used to the fact that your savings will worth much less in the future and anyone bought a house with huge mortgage will laugh in the end.

 

It's sad, but that's how it was always planned.

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The whole point of government measures is to inflate the debt away. Rates will remain low to allow debtors to take advantage of this. There will be some discomfort before wages catch up with rising prices. The BOE  will perversley use this as a pretext not to raise rates by claiming people are struggling too much with increased bills to bare higher mortgage costs. There may be some measures to alleviate the pain of inflation, perhaps some kind of pressure placed on utility providers not to raise prices,  but rates wont be raised by very much.

 

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On 19/01/2017 at 0:04 PM, Errol said:

Who is Ult and why is he (?) unstoppable?

He's Swedish.

You say it with an emphasis on the "U" from the back of your throat like "Ult is going to skii todaaaay"

Some IKEA furniture was also named after him.

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Everyone knows quantitative easing, has delayed the inevitable. Salaries will take 30 yrs approx to catch-up to affordability. So in the end it's going to end up like the dot.com bubble.

Once the Article 50, then everyone will grab what cash they can grab and head for the hills, gleefully.

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Imported (core) inflation in energy, commodities and food prices is disinflationary for the rest of the economy, everything else being equal. If this stagflationary bias holds then we should expect to see CPI above target in the coming months even as economic activity falters and unemployment begins to climb. There's no possibility of a rate rise under such circumstances.

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