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Guest The_Oldie

King Will Be Proved Right Over Rates

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Guest The_Oldie

http://www.telegraph.co.uk/money/main.jhtm...05/ccom05.xml#1

The awful quandary that our rate-setters are in is that while they cannot afford another asset price bubble to develop, the nation is so heavily in debt that a rise in rates will put many people in deep trouble. Although a 0.25pc rise may not sound much, which is what the market expects to happen, people are so stretched that even that sort of rise can send them into a tailspin. It's a call that's impossible to get right but it's a call that's going to have to be made.

Mervyn King was right about one thing, however. Back in August the MPC decided to cut rates, a mistake as it turns out, but King was very firmly on the side of the hawks. He voted against the move. He will be proved right, but at what cost?

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Rates need to go to at least 5% now.

I bet that's what Mervyn wants too, but will the other MPC cronies vote against him this time as well ?

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Why was the rate cut a mistake? I think the BoE are doing a pretty good job out of a bad situation. Surely the mistake would have been not to cut rates and allow the economy to go into recession.

<_<

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Guest muttley

Why was the rate cut a mistake? I think the BoE are doing a pretty good job out of a bad situation. Surely the mistake would have been not to cut rates and allow the economy to go into recession.

<_<

What they are saying is that it caused people to borrow more, without stimulating economic growth sufficiently.

You decide whether you agree with that.

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At 4.75% the housing market was slowing at a steady pace. At 4.5% it picked up really quickly, it seems (although only one number from the Halifax is suggesting this, but sshh don't tell 'em :) ).

If the market is really that sensitive then a 0.25% increase in rates could be enough to stop the housing market in its tracks. "As early as next month." Bring it on. :)

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What they are saying is that it caused people to borrow more, without stimulating economic growth sufficiently.

You decide whether you agree with that.

I don't, and IMO it's incorrect for the Torygraph to state that. GDP and all indicators are pointing up. Unemployment may be up, but that will probably follow. I can see the case for rate rises in the future but I think the cut last August was a good move.

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Guest muttley

I don't, and IMO it's incorrect for the Torygraph to state that. GDP and all indicators are pointing up. Unemployment may be up, but that will probably follow. I can see the case for rate rises in the future but I think the cut last August was a good move.

Who'd be an economist?

Don't blame the Telegraph ( or HPC). They can smell blood.

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I think the BOE has an appaling record. At every phase in their attempt to "manage" the economy about the only tangible long lasting thing they have created is debt bubble that will hang around for decades. Pensions have been trashed, savings slashed, large proportions of the population coerced into mortgage fraud and speculation, companies hit by rising costs for land and staff (that is if appropriate staff can live anywhere near ) and these costs have been an additional prime driver in offshoring our future.

The wider economy has been run in the same way the govt. has run the NHS, both are now a stinking mess, even if the majority of people do not realise it yet, they will over the coming decades.

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I think the BOE has an appaling record. At every phase in their attempt to "manage" the economy about the only tangible long lasting thing they have created is debt bubble that will hang around for decades. Pensions have been trashed, savings slashed, large proportions of the population coerced into mortgage fraud and speculation, companies hit by rising costs for land and staff (that is if appropriate staff can live anywhere near ) and these costs have been an additional prime driver in offshoring our future.

The wider economy has been run in the same way the govt. has run the NHS, both are now a stinking mess, even if the majority of people do not realise it yet, they will over the coming decades.

Yeah but you can't blame the BoE for all the ills you describe. IRs are only one way to control the economy, the government have a big role to play also. The BoE is a convenient scape goat for the government.

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Yeah but you can't blame the BoE for all the ills you describe. IRs are only one way to control the economy, the government have a big role to play also. The BoE is a convenient scape goat for the government.

The BOE are and were in a position to suggest all manner of ways to bolster the economy without creating a debt bubble of the proportions of which we see today.

The fact that they have sat there, like dazzled bunnies in the headlight, blindly following their main remit and totally ignoring their second (of financial stability) suggests to me they are not up to the job.

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The BOE are and were in a position to suggest all manner of ways to bolster the economy without creating a debt bubble of the proportions of which we see today.

The fact that they have sat there, like dazzled bunnies in the headlight, blindly following their main remit and totally ignoring their second (of financial stability) suggests to me they are not up to the job.

What exactly can they do? They can't raise taxes, they can't invest money in education or transport as they have no authority to do so. Why do think they have ignored financial stability?

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Golden Shower,

What exactly can they do? They can't raise taxes, they can't invest money in education or transport as they have no authority to do so.

Simple, prior to jamming rates down make sure appropriate credit and regulatory controls are in place.

Why do think they have ignored financial stability?

Ask Andrew Large why he walked off early.

Edited by OnlyMe

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Guest Charlie The Tramp

and totally ignoring their second (of financial stability)

Just like the balance of payments, not worth a mention these days. :rolleyes:

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Just like the balance of payments, not worth a mention these days. :rolleyes:

Exactly, it is a little incovenient mentioning the likes of that statistic as it blows the whole policy wide open and reveals it for what it is.

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Everyone now knows that interest rates need to go up at some point soon, but why will th Boe hold off for as long as possible, IN ORDER TO SAVE THE STUPID WHO BORROWED TOO MUCH.

It makes me so angry in this Country, we give preferential treatment to the stupid and lazy, we have done the right thing by not getting suckered into a illusionary boom, but now we will pay for the mugs that did.

Some of these indebted twats would stop breathing if you did it for them.

Sam

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Yep the BOE is in a Catch22 situation, I constantly banging on about how this precarious housing orientated economy is balance around a 0.25% base rate movement. But sooner or later if you want to save the patient you will have to administer the medicine, the longer it is delayed the more painful it will be.

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Yep the BOE is in a Catch22 situation, I constantly banging on about how this precarious housing orientated economy is balance around a 0.25% base rate movement. But sooner or later if you want to save the patient you will have to administer the medicine, the longer it is delayed the more painful it will be.

I cannot believe that they pay the BoE to adminster this sham. The Stats office figures lack any probity whatsoever so how can the BoE properly set interest rates. It's all finger in the air.

When it's plain and simple that filling up you car with a necessary consumble is crippling your wallet it doen't take a genius to conclude that wage-demands will eventually take off. I'd like an enquiry into the wage surveys because this whole thing stinks. If it really is so frightening to bump up the rate by a quarter point this whole economy is ****ed.

It has also been said that petrol acts as a tax and therefore we can have an interest rate reduction on the back of rising oil prices. I don't understand this theory. Why not just reduce the tax on petrol? Both will limit wage demands.

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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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