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Tempest

Has Mervyn Stiffed Gordon This Time?

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I am sure the rationale for the rate rise can be backed up by some forward inflation problems in the BoE quarterly report due out, but the voting split will be very interesting.

1. I cannot believe it was unanimous based on recent votes - if it was, then inflation will be much worse than the market expects in a few months and there is trouble ahead.

2. If it was a split decision, could Mervyn have got the BoE members to push the rise through now using the opportunity afforded by Gordon's 2 external replacement appointees only joining the MPC from Sept and Oct?

As I understand it the current members are:

Mervyn King, Governor

Sir John Gieve, Deputy Governor

Rachel Lomax, Deputy Governor

Kate Barker

Charles Bean

Prof. David Blanchflower

Paul Tucker

Merv is more likely to have had a casting vote with 6 other members than he is with 8 other members... I reckon it was 4-3.

If Merv thought that it would be harder to push a rate rise through in Sept or Oct (if the BoE felt it was needed) because two of GBs appointees would then need to be persuaded (and might be reluctant to act to raise rates immediately for risk of being termed "hawks" forever) - wouldn't he try to force it through now to be sure?

A little semi-conspiracy for you, but if I were Merv that is how I would have thought and acted - I would have had one eye on my future ability to do what was right and not let GB put me in the mire.

The fact that I don't think Merv is a fan of GB adds spice to the mix!

Edited by Tempest

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I doubt it. Recent data clearly points to inflationary forces being higher than previously thought. Hence the rate hike was brought forward from September.

If it doesn't work then there will be more.

Edited by George Mainwaring

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I doubt it. Recent data clearly points to inflationary forces being higher than previously thought. Hence the rate hike was brought forward from September.

If it doesn't work then there will be more.

it won't work - and there will be :)

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I doubt it. Recent data clearly points to inflationary forces being higher than previously thought. Hence the rate hike was brought forward from September.

If it doesn't work then there will be more.

You're missing the point - that assumes there was only one decision in the mind ofall the MPC. I am suggesting it was a split decision (I suspect that will be a popular view). If it was split then some will have said no change is needed and others it is. Merv would have known this and I am saying that if this came down to his casting vote he may have chosen to vote for a rise now even if he felt a rise could wait for a month or two on the basis that he might not have the chance to direct/cause a rise later if more new MPC members vote the other way (ie against a rise in those months)!

Edited by Tempest

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The worst the new doves will be able to do is push for a hold - worst case senario is rates at 4.75% - where we were last summer when HPI was going over the cliff - since then £0.1 billion of debt has been added - Ooops!

Bit like that bus balancing on cliff scene in Italian Job

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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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