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The Sunday Times: Standing Pat On I R May Unleash Inflation

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The Sunday Times April 23, 2006

Standing pat on interest rate may unleash inflation

If the Fed indeed calls a halt to the ratcheting-up of interest rates, it might be missing an opportunity to keep inflation under control. Commodity prices are soaring, profits and share prices are providing upside surprises, the American economy is moving smartly ahead, consumers continue to troop into stores in search of their hearts’ desires, congressional spending shows no sign of tapering off, the labour market continues to tighten, and the economy’s excess capacity is rapidly being sopped up by rising demand.
Equally important, when the Fed signals its intention to stand pat at 5%, or 5.25%, the dollar will be less attractive to investors, just when an increase in interest rates in recovering Japan will be diverting some cashflows from American to Japanese assets

We are entering the downside of the economic cycle. Higher IR and bursting commodity bubbles. House prices are already falling notwithstanding the Estate Agent's claims to the contrary. Yields are tanking on BTLs and even the Irish Tiger is wobbling with debt problems and falling public sentiment.

The coffee has already brewed, did you miss the aroma? :o

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It seems fairly clear that the world-wide undoing of the housing bubble is really down to what happens in America, and the USD.

Japan is going to look increasingly attractive to investors if the Fed stop raising Interest Rates - so they have to continue... could the Fed somehow get locked into a spiral of raising rates ?

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  • 302 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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