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Reports Of Changes To Mpc Rate Setting Criteria

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I heard on news24 a 2 second item about calls for the way that the MPC makes rates decisions to be changed. Instead of being based on inflation figures it would be based upon wage inflation.

Is this another way of muddling the MPCs role to stop them raising rates in the light of the CPI possibly moving above trend in the months ahead.

Can't find any information anywhere about it though.

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i have thought for some time they'd fiddle the figures in some way to avoid raising IRs.........

or simply by stating that the intersts of the wider economy are more important than curbing inflation.

....They coyuld also cheat by including house prices in the stats now they're falling .........

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So they de-link the interest rate from exactly what it is meant to curb?? Very clever :o:unsure::blink::blink:

If they do this it will just mean:

  • Artificially low rates
  • Artificially low wage inflation (as they'll try and keep it down... see GB begging last year)
  • Consumer Price inflation can run rampant and they don't have to care....

For the second time today.... I predict a riot.

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So they de-link the interest rate from exactly what it is meant to curb?? Very clever :o:unsure::blink::blink:

Wouldnt be surprised if the call came from that economic powerhouse, the TUC, though I'd like to see Brown try and get away with it.

He got away with CPI changes a few years ago, but that was when few questioned the economic 'miracle'

Prudence Brown is now universally viewed as a scheming fool by economists/business, even though Joe Public have yet to wise up

Im sure any attempts to do this wont go unnoticed, and not sure if he'd risk what's left of his reputation

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So they de-link the interest rate from exactly what it is meant to curb?? Very clever :o:unsure::blink::blink:

If they do this it will just mean:

  • Artificially low rates

  • Artificially low wage inflation (as they'll try and keep it down... see GB begging last year)

  • Consumer Price inflation can run rampant and they don't have to care....

For the second time today.... I predict a riot.

I will be shocked if this country DOES NOT Riot if this CLOWN keeps changing the goal posts. As we are now - the only criminal thing to do in this country is be honest!!!

I will turn to crime coz contrary to popular belief CRIME SEEMS TO PAY!!!

This Tw@t needs sacking - and NOW!!!!

TB

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I will be shocked if this country DOES NOT Riot if this CLOWN keeps changing the goal posts. As we are now - the only criminal thing to do in this country is be honest!!!

I will turn to crime coz contrary to popular belief CRIME SEEMS TO PAY!!!

This Tw@t needs sacking - and NOW!!!!

TB

Absolutely.

Why work 40 hours a week for ever decreasing pay when you'll only get an ASBO for nicking 10 cars a week, just so long as you are on benefits.

I'm not ready to revolt, but I can see the attractions for people being squeezed.

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So they de-link the interest rate from exactly what it is meant to curb?? Very clever :o:unsure::blink::blink:

If they do this it will just mean:

  • Artificially low rates

  • Artificially low wage inflation (as they'll try and keep it down... see GB begging last year)

  • Consumer Price inflation can run rampant and they don't have to care....

For the second time today.... I predict a riot.

This relates to some things I mentioned in other threads. Would Gordon Brown and the government be so keen on preserving high house prices and preventing a crash that they would be prepared to sacrifice the economy and the country's future to do so. If they are going to make the changes described here then the answer would appear to be yes.

If this happens then I would definitely be keen to move my funds out of GB pounds. Trouble is, I don't know enough about the financial markets to have any idea which currency would be a safe bet :(

Billy Shears

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This relates to some things I mentioned in other threads. Would Gordon Brown and the government be so keen on preserving high house prices and preventing a crash that they would be prepared to sacrifice the economy and the country's future to do so. If they are going to make the changes described here then the answer would appear to be yes.

If this happens then I would definitely be keen to move my funds out of GB pounds. Trouble is, I don't know enough about the financial markets to have any idea which currency would be a safe bet :(

Billy Shears

I think we should turn your question around. Would any government be stupid enough to sacrifice the current stability and future growth by trying to squeeze borrowers too hard?

If it takes re-writing the rules, funnily enough, that is what Labour is good at.

Hint: Currencies aren't a safe bet, they're used for exchanging goods. Quickly exchange yours for a home.

Edited by Time to raise the rents.

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One day, soon enough, you lot will wake up & have a revelation - GROWTH is more important than inflation.

That dosen't help when GB is constantly fudging those figures too.

Growth seems to always be getting revised downwards these days, as GB had his sums wrong... but thats all after he's told people that growth was good. It all gets revised much more quietly.

If taxation is too high, and input inflation is too high, then this results in higher consumer price inflation.

This reduces consumer demand and spending and starts a vicious cycle circling around the toilet pan.

All of the money that is going into Housing due to rampant HPI is money not going into investment, and spending which supports companies who employ people... its all linked. There is no point pretending that growth figures are strong (to hide a recession) when retail sales are plummetting, companies are cutting costs (from what I'm seeing) and unemployment is on the increase (as are repossessions and bankruptcies/IVAs).

But you already knew that didn't you TTRTR? :P

I think we should turn your question around. Would any government be stupid enough to sacrifice the current stability and future growth by trying to squeeze borrowers too hard?

Yes. They are blatantly self interested and self obsessed.

They would sell their own mothers for a minute of fame and power.

And they would tell you the sky is green while you're looking up into a blue summer sky.

They are politicians of the 21st century... maybe you should get out of the mindset that they are there for our benefit.

Hint: Currencies aren't a safe bet, they're used for exchanging goods. Quickly exchange yours for a home.

Hint: houses aren't a safe bet if they plummet in value. Especially when you have a large mortgage. Throw in unemployment and the need to relocate and it gets a very unsafe bet.

TTRTR... why pump housing? Are you trying to exit your sizeable portfolio of rachmanesque hovels?

Edited by non-FTBer

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One day, soon enough, you lot will wake up & have a revelation - GROWTH is more important than inflation.

Exactly!........and they would do it right now if they knew they could keep a lid on the inflation and avoid it running riot.....

eg let wages rise at 6 or 7% with CPI at 4 or 5%.......I think previous posters have described this as ''inflating their way out of trouble''.........The pound would probably lose value accordingly but the ''terms of trade'' as economists call them would remain more or less the same........

In this scenario they could raise IRs a little ...but not enough to cause a credit crunch.....House prices would remain the same or fall a bit (as IRs a third higher than today's would easily offset the increasing salaries) meaning they were falling at least 5% pa in real terms......

House price boom sorted

Edited by Michael

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I think we should turn your question around. Would any government be stupid enough to sacrifice the current stability and future growth by trying to squeeze borrowers too hard?

If it takes re-writing the rules, funnily enough, that is what Labour is good at.

Hint: Currencies aren't a safe bet, they're used for exchanging goods. Quickly exchange yours for a home.

Provided that holding interest rates low is the correct thing to do. Others have pointed out on this site in very well reasoned arguments the problems that can occur if the UK holds rates low when it is inadvisable to do so.

Re-writing the rules is something Labour does quite often. They also have a tendancy to refuse to admit that they've got it wrong and dig themselves into deeper and deeper holes.

And as for buying a house, why buy a house when the prices of houses are going down where I live?

Billy Shears

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Before the 1970s IRs were always low.......but lending of all types was strictly regulated and rationed..

Anyone remember the ''corset'' ?......

In the 70s 80s and 90s borrowing was relaxed but IRs were very volatile.......

We are in uncharted territory now as for the first time we have very low rates (even on long term fixes) combined with very lax lending policies...obviously good for the bulls in the short run....but what will happen later on?

Edited by Michael

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Provided that holding interest rates low is the correct thing to do. Others have pointed out on this site in very well reasoned arguments the problems that can occur if the UK holds rates low when it is inadvisable to do so.

Re-writing the rules is something Labour does quite often. They also have a tendancy to refuse to admit that they've got it wrong and dig themselves into deeper and deeper holes.

And as for buying a house, why buy a house when the prices of houses are going down where I live?

Billy Shears

I'm still waiting for education,education,education to be sorted out, them i would like them to sort out NHS,NHS,NHS maybe try and get some dentists back, maybe try and sort out the mess they have created then i would like them to f*ck off. Do i ask to much :lol:

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One day, soon enough, you lot will wake up & have a revelation - GROWTH is more important than inflation.

Yes TRTTRRRTTRR...

Have you forgotten about our legacy of boom and bust policies?...

Stable growth is more important than unstable growth.

:blink:

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Exactly!........and they would do it right now if they knew they could keep a lid on the inflation and avoid it running riot.....

eg let wages rise at 6 or 7% with CPI at 4 or 5%.......I think previous posters have described this as ''inflating their way out of trouble''.........The pound would probably lose value accordingly but the ''terms of trade'' as economists call them would remain more or less the same........

In this scenario they could raise IRs a little ...but not enough to cause a credit crunch.....House prices would remain the same or fall a bit (as IRs a third higher than today's would easily offset the increasing salaries) meaning they were falling at least 5% pa in real terms......

House price boom sorted

you seem to be forgetting the global economy and the fact more "british"companies would rather pay Indians 50% less to do the same job.....

Edited by sign_of_the_times

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NEVER trust any financial authority to stick within any sort of "target" range for something.

Central banks will keep inflation at a target rate whilst it's convenient. They'll simply change the target when it no longer suits them to meet it. (Technically, it will be the government which makes the actual changes).

Not that long ago, OPEC (the oil cartel) had a target of keeping prices between $22 and$28 per barrel. This was supposedly to ensure long term stability in the market. They abandoned that target when oil was over $40 a barrel and now it's about $66. Enough said. Targets are adhered to only when they are basically what would happen anyway without having a "target" in the first place.

It's a bit like someone predicting cold or at most mild weather in Winter knowing that it's unlikely you'll be proved wrong. Once Summer comes, it changes... Much the same with the financial markets where central banks, oil cartels and the like have less control than they'd like to admit and are more in the business of forecasting than controlling (apart from fiddling around the edges). At least weather forecasters don't pretend to actually control the weather.

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NEVER trust any financial authority to stick within any sort of "target" range for something.

Central banks will keep inflation at a target rate whilst it's convenient. They'll simply change the target when it no longer suits them to meet it. (Technically, it will be the government which makes the actual changes).

You make an interesting point. It seems like the inflation tackling mandate they have at the moment could come into question as the cpi figure increases. A point underlined by this quote from Reuters. In theory if inflation rate rises above trend then they should raise, though no one in the media as the balls to call for this or even half mention it. Yet flagging sales in B&Q and dixons and all the world scream out together for a collective cut.

Economists said policymakers would have to balance concerns that consumer spending is slowing again against fears that another rate cut could boost the housing market too much and that wages might pick up in response to soaring energy prices.

It is not possible to have your cake and eat it. You either tackle soaring energy prices (inflation) and raise or concern yourself with pouring petrol on the fire. I cannot believe how much the mpc have cornered themselves on this one.

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Have you forgotten about our legacy of boom and bust policies?

Remember, TTRTR bought his first place at the bottom of the last crash: he's never seen a good old British economic bust, which is probably why he doesn't believe it can happen.

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Remember, TTRTR bought his first place at the bottom of the last crash: he's never seen a good old British economic bust, which is probably why he doesn't believe it can happen.

Simply put: Hes wrong.

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Didn't your Mums teach you it's rude to speak about someone when they're not in the room?

BTW, IMO I'm one of the few who have been consistently right on this forum for the last 2 years. You lot should pay more attention to that. Without me and a few like me, this would simply be a forum of 100% wrong people in attendance.

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Without me and a few like me, this would simply be a forum of 100% wrong people in attendance.

You mean like DrBubb and cgnao stating that Gold would take off. Were they wrong?

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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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