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Realistbear

M P C Ignoring Gordon's C P I Miracle Figures

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http://thescotsman.scotsman.com/business.cfm?id=599002006

Caution over rates despite fall in CPI

BILL JAMIESON EXECUTIVE EDITOR

INFLATION has fallen to just 1.8 per cent - the slowest pace in more than a year. But the figure does not take into account the latest sharp rises in household energy bills or the spike in oil.
It is thus unlikely to persuade the Bank of England's monetary policy committee
(MPC) from keeping interest rates steady at 4.5 per cent.
Surging household bills and record oil prices look set to push inflation back up in the coming months. This may prompt workers to demand higher wages and put further pressure on prices.
But he added that
Mervyn King, the Bank of England Governor, "would rather risk an undershoot than an overshoot, because of the effect the latter might have on inflation expectations. He will not vote for lower rates unless something major happens".
Gold
, which earlier touched $645.75 an ounce, the highest since November 1980,
fell to $619.10
. Copper and aluminium both shed 3 per cent.

Mervyn, being a realist, will not lower rates unless something serious occurs to force rates down: recession.

Edited by Realistbear

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Firstly, I think Mervyn King would much prefer an overshoot than an undershoot. So the geezers conclusions are flawed.

Secondly, what part of recession do you not understand when it comes to interest rate decisions?

How are wage expectations going to go up when everyday more and more unemployment is highlighted in the press.

I've noticed over the last few days so many of your posts conclude the same set of outcomes irrespective of the original linked content. Leads me to believe, unfortunately, that your too blinkered in your thought process.

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Firstly, I think Mervyn King would much prefer an overshoot than an undershoot. So the geezers conclusions are flawed.

Secondly, what part of recession do you not understand when it comes to interest rate decisions?

How are wage expectations going to go up when everyday more and more unemployment is highlighted in the press.

I've noticed over the last few days so many of your posts conclude the same set of outcomes irrespective of the original linked content. Leads me to believe, unfortunately, that your too blinkered in your thought process.

Wage expectations are going up because the RRI is going up (Real Rate of Inflation). People must be paid more to live in the "Miracle Economy" of overpriced houses, surging fuel costs, higher taxes and dissappearing pensions. In a deteriorating economy the blinkered are numbered among those who cannot see the change coming not those warning of its imminence.

Hi Realist

Mervyn: I will not lower rates unless something major happens"

Again you are making things up, Merve didn't say it was a quote by Kernohan, economist at Royal London Asset Management

Complain to the journo--its quoted as a comment made by Mervyn. Its Mervyn's well known position as a hawk.

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Complain to the journo--its quoted as a comment made by Mervyn. Its Mervyn's well known position as a hawk.

The Journo is has it correct, its you that seems to be unable to read , here is the full quote

However, there was some support for the lone MPC interest rate dove, Stephen Nickell. S Ian Kernohan, economist at Royal London Asset Management, said: "The inflation data appears to support Steve Nickell's argument that the effect of slower economic growth will now begin to put downward pressure on inflation and that if the MPC does not cut rates, it risk undershooting the target."

But he added that Mervyn King, the Bank of England Governor, "would rather risk an undershoot than an overshoot, because of the effect the latter might have on inflation expectations. He will not vote for lower rates unless something major happens".

It clearly relates to what S Ian Kernohan is saying, no where does it say Mervyn said this. Its you reading what you want to read and not what things say.

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In a deteriorating economy the blinkered are numbered among those who cannot see the change coming not those warning of its imminence.

But the point is there is no certainty of how this is all going to unravel. Despite your prolific posts suggesting that interest rates must rise this year, no one really has a clue. Could anyone have predicted yesterday's inflation figures would have undershot the 2% target? Trawling through the financial commentariat for clues on what King is thinking is as useful as reading the entrails of a dead pigeon.

It really is impossible to predict accurately when and which way interest rates will move next. Certainty about one's own powers of analysis will only backfire should things go the opposite way to how you predict. What will happen if the BoE cuts rates later this year? Would your credibility be intact?

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But the point is there is no certainty of how this is all going to unravel. Despite your prolific posts suggesting that interest rates must rise this year, no one really has a clue. Could anyone have predicted yesterday's inflation figures would have undershot the 2% target? Trawling through the financial commentariat for clues on what King is thinking is as useful as reading the entrails of a dead pigeon.

It really is impossible to predict accurately when and which way interest rates will move next. Certainty about one's own powers of analysis will only backfire should things go the opposite way to how you predict. What will happen if the BoE cuts rates later this year? Would your credibility be intact?

If Mervyn cuts later this year it will be, as the article says, for a good reason. The economy is not as healthy as Gordon has been portrayiong it and I think that is part of the reason why the MPC are not taking much notice of his manipulated CPI data. I would have predicted the CPI as undershooting the 2% target because they have removed so many items that have risen in price and substituted them with items that are bound to fall in price such as imported electronic goods (MP3 players etc.). Items that are not discretionary such as petrol, heating fuel, council tax, TV licenses, train fares, house prices are conveniently removed and these are the real things that cause inflation.

Edited by Realistbear

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The only reason for rates to be cut is if the majority on the MPC think the UK ecomomy is going to go tit$ up!

They will increase rates if inflation over the next 4 months increases, either way holding property, especialy highly leveraged property as an investment is a crazy risk at this time. The vast majority of the Johnny come lately BTL's havent got a clue of their exposure.

There is only one outcome!

Pablo Silver or Lead?

Edited by Pablo-silver or lead?

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The only reason for rates to be cut is if the majority on the MPC think the UK ecomomy is going to go tit$ up!

They will increase rates if inflation over the next 4 months increases, either way holding property, especialy highly leveraged property as an investment is a crazy risk at this time. The vast majority of the Johnny come lately BTL's havent got a clue of their exposure.

There is only one outcome!

Pablo Silver or Lead?

Why can't they cut rates if growth is below trend, and inflation is below target?

Why would they increase rates if inflation is because of a commodity spike?

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Firstly, I think Mervyn King would much prefer an overshoot than an undershoot. So the geezers conclusions are flawed.

Secondly, what part of recession do you not understand when it comes to interest rate decisions?

How are wage expectations going to go up when everyday more and more unemployment is highlighted in the press.

fairly simple ignorant steve.

...it's because the world was flooded with imaginary credit 15 years ago,and the WORLD now has to pay it back.

...unemployment or no unemployment,the debt must be repaid......don't for one minute think this is purely a UK issue,it aint!!!!!.......money is getting scarcer,and REAL money scarcer still.

wages cannot be raised as the companies who pay them seek to curtail costs.

punters must curtail costs also.....we are in an era where we must do more with less or perish.

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Why would they increase rates if inflation is because of a commodity spike?

How odd. You don't think that housing prices will return to 3.5x income, even though there's signficant oversupply with many rental properties vacant, but you do think that oil will return to $20 a barrel, even though it's running out.

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  • 341 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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