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Realistbear

U S Core Inflation Highest For 11 Years

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http://www.denverpost.com/business/ci_4124089

Core inflation at 11-year high

Wednesday, August 02, 2006

Report keeps pressure on Fed to continue interest-rate hikes

By Rex Nutting

MarketWatch

Washington - U.S. core consumer inflation matched an 11-year high in June, keeping the pressure on the Federal Reserve to raise interest rates to subdue inflation, the Commerce Department reported Tuesday.
The data from June showed a healthy rise in household incomes, and another tepid month for consumer spending, which accounts for roughly two-thirds of the U.S. economy.
The Fed's favored inflation gauge, the core personal consumption expenditure price index, increased 0.2 percent for the third straight month in June. Core inflation, excluding food and energy, has risen 2.4 percent in the past 12 months, matching the largest year-over-year gain since the spring of 1995.
"Inflation is rising faster than it was before,"
said Stephen Stanley, chief economist for RBS Greenwich Capital. Core inflation will likely accelerate to 2.5 percent in July and to 2.6 percent in August, he said.

Godd thing we don't have any inflation here or the BoE would have to think about raising rates by early next Spring.

OZ admit blunder in not hiking sooner:

http://www.smh.com.au/news/business/reserv...4198205204.html

Reserve Bank admits it misread the tea leaves

Stephen Bartholomeusz
August 3, 2006
IMPLICIT in the Reserve Bank's decision to lift official interest rates for the second time in four months is an admission of failure. It would, however, be a hard taskmaster who condemned the bank for not realising earlier that inflationary pressures in the economy were surging.

Will Gordon cause the BoE to leave it too late? Denial will not make inflation go away. The WHOLE world admits it is happening and are dealing with it regardless of HPI-MEW. Gordon cannot protect house prices for ever.

Edited by Realistbear

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http://www.denverpost.com/business/ci_4124089

Core inflation at 11-year high

Wednesday, August 02, 2006

Report keeps pressure on Fed to continue interest-rate hikes

By Rex Nutting

MarketWatch

Washington - U.S. core consumer inflation matched an 11-year high in June, keeping the pressure on the Federal Reserve to raise interest rates to subdue inflation, the Commerce Department reported Tuesday.
The data from June showed a healthy rise in household incomes, and another tepid month for consumer spending, which accounts for roughly two-thirds of the U.S. economy.
The Fed's favored inflation gauge, the core personal consumption expenditure price index, increased 0.2 percent for the third straight month in June. Core inflation, excluding food and energy, has risen 2.4 percent in the past 12 months, matching the largest year-over-year gain since the spring of 1995.
"Inflation is rising faster than it was before,"
said Stephen Stanley, chief economist for RBS Greenwich Capital. Core inflation will likely accelerate to 2.5 percent in July and to 2.6 percent in August, he said.

Godd thing we don't have any inflation here or the BoE would have to think about raising rates by early next Spring.

OZ admit blunder in not hiking sooner:

http://www.smh.com.au/news/business/reserv...4198205204.html

Reserve Bank admits it misread the tea leaves

Stephen Bartholomeusz
August 3, 2006
IMPLICIT in the Reserve Bank's decision to lift official interest rates for the second time in four months is an admission of failure. It would, however, be a hard taskmaster who condemned the bank for not realising earlier that inflationary pressures in the economy were surging.

Will Gordon cause the BoE to leave it too late? Denial will not make inflation go away. The WHOLE world admits it is happening and are dealing with it regardless of HPI-MEW. Gordon cannot protect house prices for ever.

Thumbs up for the Aussies who can make an admission that they feel they made a mistake. Would have been easy to blame some other 'market factor' like we will no doubt see from GB/MPC/Banks/MP's/EA's soon about all sorts of things! :o

AFP

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IMPLICIT in the Reserve Bank's decision to lift official interest rates for the second time in four months is an admission of failure. It would, however, be a hard taskmaster who condemned the bank for not realising earlier that inflationary pressures in the economy were surging.[/indent]

How does the rate setting get done in OZ? How different is it to the UK? They must be under the same pressures to keep interest rates down as in the UK to avoid collapsing the housing market.

Aren't we still about 12-18 months behind OZ in terms of the interest rate cycle?

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SA bank not afraid to do what is necessary either:

http://www.engineeringnews.co.za/eng/news/...ing/?show=91054

ARB may raise key rate to 8%
South Africa's central bank probably will raise its benchmark lending rate for the second time in two months as record oil prices and a weaker rand stoke inflation, a survey of economists shows.
The Reserve Bank will increase the repurchase rate by half a percentage point to 8% on Thursday, according to all 16 economists surveyed by Bloomberg. The bank will announce its decision at about 3:30 p.m. in Pretoria.
Inflation in Africa's biggest economy accelerated in June at the fastest pace in 10 months after consumer spending surged, oil rose and the rand fell to a 2 1/2-year low against the dollar, increasing import costs. Central bank Governor Tito Mboweni said July 31 the risks “demand vigilance”. More than a dozen central banks around the world raised rates last month.

Gordon is pretty much alone in the world now. How can it be that the UK is the only place on earth without inflation???

ECB go for it too:

http://www.turkishpress.com/news.asp?id=135945

ECB set to raise key rate in tightening monetary world
08-02-2006, 12h04
FRANKFURT (AFP)
A Euro sculpture stands in front of Frankfurt's Eurotower, which houses the European Central Bank (ECB). The ECB is expected to raise its key lending rate again on Thursday against a worldwide backdrop of pressure for tightened monetary conditions because of strong growth and signs of inflation.
Edited by Realistbear

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The second biggest bank of them all warns it is not done yet either:

http://biz.yahoo.com/ft/060802/fto08022006...52827.html?.v=1

FT.com

Yen bolstered by hawkish rate talk
Wednesday August 2, 7:05 am ET
By Steve Johnson
The yen ticked higher in European morning trade on Wednesday, helped by hawkish comments from Atsushi Mizuno, a policy board member of the Bank of Japan.
Mr Mizuno spoke of the risk that markets may "mistakenly interpret that a gradual adjustment of interest rate levels mean no additional rate hikes this year".

Banks highly likely to continue hiking: Fed, BoA, ECB, BoI, BoJ --all that matter.

It may take a sterling crisis to move the BoE and by then it will be too little too late as inflation will already have taken hold.

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The second biggest bank of them all warns it is not done yet either:

http://biz.yahoo.com/ft/060802/fto08022006...52827.html?.v=1

FT.com

Yen bolstered by hawkish rate talk
Wednesday August 2, 7:05 am ET
By Steve Johnson
The yen ticked higher in European morning trade on Wednesday, helped by hawkish comments from Atsushi Mizuno, a policy board member of the Bank of Japan.
Mr Mizuno spoke of the risk that markets may "mistakenly interpret that a gradual adjustment of interest rate levels mean no additional rate hikes this year".

Banks highly likely to continue hiking: Fed, BoA, ECB, BoI, BoJ --all that matter.

It may take a sterling crisis to move the BoE and by then it will be too little too late as inflation will already have taken hold.

I still don't underdstand why sterling is so high, how can this be when we have been frozen in rates for 12 months whilst others are rising, even if sterling is bought based on a futures increase in rates it will be a long time before/if they raise considerably.

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I still don't underdstand why sterling is so high, how can this be when we have been frozen in rates for 12 months whilst others are rising, even if sterling is bought based on a futures increase in rates it will be a long time before/if they raise considerably.

Sterling is the darling of the world currency traders at present because of perceived stability. There is no inflation in our economy, stable to growing house market, no stress in the financial markets and banks with adequate debt provision and higher IR than the ECB. IMO, the tide is quickly going out on the Miracle Economy and Gordon will be caught without his trunks on.

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Sterling is the darling of the world currency traders at present because of perceived stability. There is no inflation in our economy, stable to growing house market, no stress in the financial markets and banks with adequate debt provision and higher IR than the ECB. IMO, the tide is quickly going out on the Miracle Economy and Gordon will be caught without his trunks on.

We've been saying that for years and Sterling is still doing ok... I can't see what's going to change...

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We've been saying that for years and Sterling is still doing ok... I can't see what's going to change...

Its the perception that is dangerous. The UK economy is a ticking time bomb with inflation, twin deficits, growing unemployment, bad debt rising, manufacturing shutting down. My guess is that the currency markets see all of this but feel it has a few more months to go before it shows signs of cracking. The articles we read on HPC are heads-up warnings of what is ahead. Currency traders are often day trading and don't care about 3 months down the road.

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What would you say is the safest currency to save in?

IMO, the US $. It would be a contrarian move at present as the currency dealers are in sterling and the Euro for the short term and short term is all currency markets are interested in. A recession is coming as the debt mountains unwind and government spending is reigned in. The US economy is the most resilient in the world and they tend to weather storms better and come out faster than Europe. The pound will stay strong until the Miracle Economy unwinds a little more and that will be seen to be happening as unemployment stats hit the news. The twin deficits are growing at a rate of knots which means higher taxes, lower productivity and a general loss of confidence in Gordon's once miraculous powers to keep HPI-MEW going forever. Further, Gordon cannot hike IR too much as it will hasten the recession and the differentials in IR will start to move more cash into US $. If the Midlle East breaks out into a full on war then the US $ will skyrocket as the flight to safety is always to US bonds.

I am in US $ primarily because my investments are mostly held in the US where I have lived of and on for many years. I plan to buy ahouse in the UK after the HPC has laid waste to the bubble and I do not see a trough in prices for at least 2, maybe 3 years. Thus, the $ bet is long term. My gut feeling is that sterling will start to weaken around October after the ECB has hiked twice more and our twin defcits are seen to be out of Gordon's control. Manufacturing will suffer with an overvalued poound and the lag should show up later this year also. The historical average for CABLE has been in the 1.60's if you look at the last decade. About right IMO.

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IMPLICIT in the Reserve Bank's decision to lift official interest rates for the second time in four months is an admission of failure. It would, however, be a hard taskmaster who condemned the bank for not realising earlier that inflationary pressures in the economy were surging.

Rollocks, you don't get input prices rising like this and not have inflation. Economies are generally about as productive and efficient as they will get in the developed world and overall costs are rising - there is only one thing to do raise prices.

http://quotes.ino.com/chart/?s=NYBOT_CR&v=dmax

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My feeling 12 months ago was Japanese building land held in Yen.

But I know nothing. So take with large pinch of salt.

Edited by uro_who

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http://www.denverpost.com/business/ci_4124089

Core inflation at 11-year high

Wednesday, August 02, 2006

Report keeps pressure on Fed to continue interest-rate hikes

By Rex Nutting

MarketWatch

Washington - U.S. core consumer inflation matched an 11-year high in June, keeping the pressure on the Federal Reserve to raise interest rates to subdue inflation, the Commerce Department reported Tuesday.
The data from June showed a healthy rise in household incomes, and another tepid month for consumer spending, which accounts for roughly two-thirds of the U.S. economy.
The Fed's favored inflation gauge, the core personal consumption expenditure price index, increased 0.2 percent for the third straight month in June. Core inflation, excluding food and energy, has risen 2.4 percent in the past 12 months, matching the largest year-over-year gain since the spring of 1995.
"Inflation is rising faster than it was before,"
said Stephen Stanley, chief economist for RBS Greenwich Capital. Core inflation will likely accelerate to 2.5 percent in July and to 2.6 percent in August, he said.

Godd thing we don't have any inflation here or the BoE would have to think about raising rates by early next Spring.

OZ admit blunder in not hiking sooner:

http://www.smh.com.au/news/business/reserv...4198205204.html

Reserve Bank admits it misread the tea leaves

Stephen Bartholomeusz
August 3, 2006
IMPLICIT in the Reserve Bank's decision to lift official interest rates for the second time in four months is an admission of failure. It would, however, be a hard taskmaster who condemned the bank for not realising earlier that inflationary pressures in the economy were surging.

Will Gordon cause the BoE to leave it too late? Denial will not make inflation go away. The WHOLE world admits it is happening and are dealing with it regardless of HPI-MEW. Gordon cannot protect house prices for ever.

What they need is a core-core inflation figure to strip out the volatile/energy drive 'spike' from the core inflation figure - I think they did that last time round in the early 70's - worked a treat then! :huh:

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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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