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Realistbear

Further I R Warning From B O E's Katie

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http://www.telegraph.co.uk/money/main.jhtm.../22/ixcity.html

Barker warns of inflation threat waiting in wings

Edmund Conway, Economics Editor (Filed: 22/03/2006)

A top Bank of England figure last night warned that the Bank's existing economic growth forecasts are over-optimistic, and that
inflation could come back
to haunt the UK in coming months.
"Reducing the rate to a more stimulative level may risk sparking some second-round effects on wages," she said, in a speech to the CBI in Birmingham. It is encouraging that these have so far not been much in evidence, and that inflation, excluding energy, has been subdued."
Ms Barker said yesterday the Bank may have been over-optimistic with its recent growth forecast of about 3pc this year. Economists have warned that the Bank may have been too sanguine about the health of the high street in making its calculations.

It will be interesting to see if Gordon "Miracle Economy" Brown admits to some of the things the B o E see?

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http://www.telegraph.co.uk/money/main.jhtm.../22/ixcity.html

Barker warns of inflation threat waiting in wings

Edmund Conway, Economics Editor (Filed: 22/03/2006)

A top Bank of England figure last night warned that the Bank's existing economic growth forecasts are over-optimistic, and that
inflation could come back
to haunt the UK in coming months.
"Reducing the rate to a more stimulative level may risk sparking some second-round effects on wages," she said, in a speech to the CBI in Birmingham. It is encouraging that these have so far not been much in evidence, and that inflation, excluding energy, has been subdued."
Ms Barker said yesterday the Bank may have been over-optimistic with its recent growth forecast of about 3pc this year. Economists have warned that the Bank may have been too sanguine about the health of the high street in making its calculations.

It will be interesting to see if Gordon "Miracle Economy" Brown admits to some of the things the B o E see?

Most people reading the article will have been drawn to this sentence:

"as economists predicted interest rates will remain on hold for some time yet."

and at no point in article did Ms Barker state that IR will rise, she just said she didn't think it would be prudent to lower them..........

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Most people reading the article will have been drawn to this sentence:

"as economists predicted interest rates will remain on hold for some time yet."

and at no point in article did Ms Barker state that IR will rise, she just said she didn't think it would be prudent to lower them..........

I think you may have missed what Katie's concerns are. Number one is inflation and that wage pressures are a continuing problem that the B o E will have to address. Inflationary pressures are dealt with by raising the rates. Some readers may be drawn to what economists predict but as most know, few economists agree. Reality is inflation pressures and that is why Katie is hawkish on IR. With the Fed and ECB tightening it is easy to see why IR hikes are still a threat.

Denial will not chnage things. We are at the end of the boom cycle and there is still inflation in the economy as the B o E well know. The CPI figure of 2.0% is, as every person living in the UK knows, is a lie. I suspect Katies knows it as well but can't blow the whistle.

Bottom line (IMHO), Katie is warning that accomodative IR are not going to be around much longer:

"Reducing the rate to a more stimulative level may risk sparking some second-round effects on wages," she said, in a speech to the CBI in Birmingham.

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I think you may have missed what Katie's concerns are. Number one is inflation and that wage pressures are a continuing problem that the B o E will have to address. Inflationary pressures are dealt with by raising the rates. Some readers may be drawn to what economists predict but as most know, few economists agree. Reality is inflation pressures and that is why Katie is hawkish on IR. With the Fed and ECB tightening it is easy to see why IR hikes are still a threat.

Denial will not chnage things. We are at the end of the boom cycle and there is still inflation in the economy as the B o E well know. The CPI figure of 2.0% is, as every person living in the UK knows, is a lie. I suspect Katies knows it as well but can't blow the whistle.

Bottom line (IMHO), Katie is warning that accomodative IR are not going to be around much longer:

"Reducing the rate to a more stimulative level may risk sparking some second-round effects on wages," she said, in a speech to the CBI in Birmingham.

As a STR (I think you stated) you have VI to read things and interpret them to fit your agenda. You have every right to do that, as I have every right to read and interpret them as I see it. But hopefully others can read the article and see what this woman actually stated and at no time did she mention that rates will rise. (not in this article anyway) and that is my point: that your thread title is misleading.

"Reducing the rate to a more stimulative level may risk sparking some second-round effects on wages," she said, in a speech to the CBI in Birmingham. It is encouraging that these have so far not been much in evidence, and that inflation, excluding energy, has been subdued."

Edited by beenhearingthisforyears

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But hopefully others can read the article and see what this woman actually stated and at no time did she mention that rates will rise. (not in this article anyway) and that is my point.

Well no member of the MPC in public would say which direction IRs are heading. If she stated in public that rates must go up panic would set in. A neutral statement keeps the calm before the storm in case a economic miracle presents itself. ;)

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as I have every right to read and interpret them as I see it. But hopefully others can read the article and see what this woman actually stated and at no time did she mention that rates will rise. :lol: (not in this article anyway) and that is my point. B)

She does not want to spook the market, or even the vested ineterest in the media.

Regarding Realistic Bear, his reporting is second to none, you have noticed the title of the Website, we all need our daily dose of good news on here, and Doctor Realsitic Bear is prescribing the medicine. :rolleyes:

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As a STR (I think you stated) you have VI to read things and interpret them to fit your agenda. You have every right to do that, as I have every right to read and interpret them as I see it. But hopefully others can read the article and see what this woman actually stated and at no time did she mention that rates will rise. (not in this article anyway) and that is my point.

"Reducing the rate to a more stimulative level may risk sparking some second-round effects on wages," she said, in a speech to the CBI in Birmingham. It is encouraging that these have so far not been much in evidence, and that inflation, excluding energy, has been subdued."

The problem is that inflation has not been subdued--it is raging in relation to the non-discretionaries: council tax, TV license (just removed from the CPI due to the upcoming 25% hike to pay for digital broadcasts), gas, electricity, petrol/diesel, air fares, train and bus fares etc.

Saying there is no inflation apart from thos essentials that are inflationary is like saying there will be no drought this summer if it rains more. The kinds of things we would expect Tautologous Tim to recite--meaningless really.

As a STM (sold to move), I share the same goals of many that are related to seeing inflation in house prices tamed. I believe HPI has been destructive and no less so than inflation in any commodity. So, in a sense I have a VI in seeing inflation in houses come to an end. I believe Katie shares this same goal as her VI is to do her job as a central banker. Reading on top of and between the lines, I believe Katie is warning that inflation is "waiting in the wings" because of wage pressures and that the bank will no longer be accomodative and certainly not stimulative. This leaves one option: tightening.

Edited by Realistbear

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She does not want to spook the market, or even the vested ineterest in the media.

Regarding Realistic Bear, his reporting is second to none, you have noticed the title of the Website, we all need our daily dose of good news on here, and Doctor Realsitic Bear is prescribing the medicine. :rolleyes:

I agree with you and have posted that RB brings some great articles to the attention of this forum. but on a Crash site when 95%? are 'believers" i just question why he needs to sex up his threads titles and try to pass of a reader letter as if it was written by the newspaper's editorial department.

Yesterday/today there is news about possible forthcoming falling telephone bills and the strength of The City. Spring is coming so heating bills go DOWN. If people choose to ignore this side of the news then who am i to question it?

Edited by beenhearingthisforyears

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I agree with you and have posted that RB brings some great articles to the attention of this forum. but on a Crash site when 95%? are 'believers" i just question why he needs to sex up his threads titles and try to pass of a reader letter as if it was written by the newspaper's editorial department.

Yesterday/today there is news about possible forthcoming falling telephone bills and the strength of The City. Spring is coming so heating bills go DOWN. If people choose to ignore this side of the news then who am i to question it?

Warm weather causes a few things:-

Heating goes down

Petrol consumption goes up

Food consumption goes up

Alcohol consumption goes up

Entertainment expenditure goes up

Spending on retail goes up (not including comparisons to Xmas period)

Edited by OzzMosiz

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The BoE do not like to surprise the markets if they can avoid it. Hence any interest rate adjustment (up or down) is likely to have been "announced" well before hand (at least to those who can read the subtle signs).

Of interest (pun intended) are the voting positions of the MPC members as revealed in the minutes of the MPC meetings (usually released 2 weeks after the meeting). Recent minutes have shown all voting for no change bar one, who has voted for a decrease. The early sign of a future rise will be when one or two members start voting for an increase. Maybe Katie will be one of the first to do so?

The latest minutes were released today (link here) and show the same trend, ie one voting for a decrease, but mention is made of pressure to tighten (see below).

LONDON, March 22 (Reuters) - Sterling held steady on Wednesday after the Bank of England's minutes showed policymakers voted 8-1 to keep interest rates steady in March, with the focus shifting to the UK budget statement due later.

Minutes of the March 8-9 meeting showed that for some members, signs of recovery in the housing market posed an upside risk to consumption, particularly at a time when economic growth appeared to be picking up.

"I think the minutes are not a great surprise to markets, particulary with the vote having been 8-1 again. It's notable that there is a split on the committee on the risks to household consumption prospects," said Philip Shaw, chief economist at Investec.

"Some members believe that there are upside risks due to the strong housing market. So it will be interesting to see how the committee reacts to news on consumer spending over the next couple of months." By 0950 GMT, the pound stood at $1.7490 <GBP=>, up slightly on the day and unchanged from pre-minutes levels.

Against the euro, it was also higher on the day at 69.06 pence <EURGBP=>, off last week's seven-month low of 69.50. The MPC's Stephen Nickell once again dissented and voted for a 25-basis-point cut.

"Stephen Nickell's concerns lie around the belief that growth expectations are too high, as well as the absence of a pick-up in investment," HBOS said in a note to clients.

Earlier, sterling drew support after BoE's Kate Barker, generally regarded as one of the more dovish MPC members, said near-term inflation pressures and uncertainty over wage growth in Britain rule out an interest rate cut just yet.

Barker said late on Tuesday the current level of rates was neutral to slightly stimulatory and said reducing rates any further could spark wage inflation.

Markets are now waiting for UK Chancellor of the Exchequer Gordon Brown to deliver his budget statement for 2006 to Parliament at 1230 GMT.

Experts predict no big changes in tax or spending in the budget and Brown looks certain to leave his economic forecasts intact, as only three months have passed since he was forced to downgrade them in December's pre-budget report.

Hope this helps with understanding.

Regards

BP.

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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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