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dubsie

Interest Rates

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The recent increase in interest rates is likely to knock consumer confidence and hit retail spending even more. Based on rising unemployment and poor growth figures you would expect inflation to be stable but in fact it looks to be a little out of control.

The government is blaming rising fuel costs for the recent rise and therefore the latest interest rate rise will have little effect on controlling inflation. If inflation continues to rise after today we are all in big trouble this time.

Huge consumer debt and rising interest rates could mean a bust for a lot of people, but at the moment its only 1/4 of a % and even on 180,000 it only means another £45 per month.

We need to see at least 1% increase to make a big difference on house prices.

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IR will only continue to rise so long as real inflation is rising

Real inflation will continue to rise so long as people continue to borrow cheaply and spend

What the current Government fails to understand is that real inflation is so high ATM (10%+), peoples wages have not kept pace with prices (thanks to their immigration policy to surpress wages) that people are having to borrow to LIVE day-to-day (without them even realising it - inflation is THAT subtle) to bridge the gap between the two

The borrowing/spending won't stop and I think it's going to get rougher for people...

Edited by dnd

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The recent increase in interest rates is likely to knock consumer confidence and hit retail spending even more. Based on rising unemployment and poor growth figures you would expect inflation to be stable but in fact it looks to be a little out of control.

The government is blaming rising fuel costs for the recent rise and therefore the latest interest rate rise will have little effect on controlling inflation. If inflation continues to rise after today we are all in big trouble this time.

Huge consumer debt and rising interest rates could mean a bust for a lot of people, but at the moment its only 1/4 of a % and even on 180,000 it only means another £45 per month.

We need to see at least 1% increase to make a big difference on house prices.

"Bring on the interest rate rises"!!

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Iwant interest rates to be at 65

so that people whine and cry.. and I can say that

"Well 6% seems very low, you would have to be an idiot to not be able to cope with 6%.."

I am rubbish at fighting, not even sure if I can retain the moral high ground..

but it would be worth a laugh.. :)

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IR will only continue to rise so long as real inflation is rising

Real inflation will continue to rise so long as people continue to borrow cheaply and spend

What the current Government fails to understand is that real inflation is so high ATM (10%+), peoples wages have not kept pace with prices (thanks to their immigration policy to surpress wages) that people are having to borrow to LIVE day-to-day (without them even realising it - inflation is THAT subtle) to bridge the gap between the two

The borrowing/spending won't stop and I think it's going to get rougher for people...

Yes I agree, but if inflation is being driven by production costs, such as the price of wholesale gas, then the latest interest rate rise will have no impact on driving down inflation.

It would be more sane to bring down the cost of production by reducing fuel duty and cutting tax.

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Yes I agree, but if inflation is being driven by production costs, such as the price of wholesale gas, then the latest interest rate rise will have no impact on driving down inflation.

It would be more sane to bring down the cost of production by reducing fuel duty and cutting tax.

Cutting tax is always good but will certainly not reduce inflation.

The reason why interest rate are going up everywhere is that the days when inflation figures were only driven by commodity prices (oil) are over. Second round effects have already kicked in.

This is real inflation and central bankers are adapting their policies.

The only thing that will avoid further increases is weak economic data.

So it seems that we arrived at the crossing point.

Weak economy = no interest rate increase but weak housing market.

Decent or strong economy = interest rate increase and weak housing market.

The party is over, soon the mess will have to be cleaned up.

I am just grateful that I didn't join this party.

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Yes I agree, but if inflation is being driven by production costs, such as the price of wholesale gas, then the latest interest rate rise will have no impact on driving down inflation.

It would be more sane to bring down the cost of production by reducing fuel duty and cutting tax.

With current Govenment spending and growing unemployment I don't think that is going to happen

Global demand/growth is driving energy/commodity prices up - this should, in theory, reduce as (responsible) Government/Banks IR rise globally

Even without energy inflation - I think UK IR will have to rise a lot further given the current gap between wages and prices - people are still going to borrow (just to live)

Edited by dnd

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...to my mind there is a lot of inflation already in the system that has been absorbed by suppliers and not yet been fully passed on to consumers but is beginning to.

I think these cost savings have already been converted into the increasing unemploment statistics...

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I notice the CBI and the usual business / retail bodies are all in a flap with the MPC, saying that the rate increase is 'irresponsible' and damaging to business. Also I read cries of 'it will take the economy off the rails' etc.

I think its hilarious. Why is it that these lot are never ever happy with interest rates. Can they not see why the rates have to be raised? Even if it was 1% they would be complaining that they are too high!

Edited by Spoony

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Inflation?

One equation is:-

Velocity x Money Supply = Real GDP x GDP deflator.

where GDP deflator is a measure of inflation.

In recent years, the M4 money supply has been increasing at a whopping 12% typically. The latest official figures show it has slowed slightly to 8%. So this explains why in the last five years, the purchasing power of Sterling has halved as houses have doubled.

Clearly the GDP has been falling drastically even before you remove the false GDP of public sector pencil pushers shuffling paper to and thro. This is confirmed by the worst current account deficits in history which are a component of the GDP calculation.

Sainsbury's has reported 1.5% deflation in the price of its goods and 2005 saw 2% deflation. This is why the BoE has been pumping so much money and credit into the system. Unlike Japan, the UK has a current account deficit. Japan's fiscal deficit is not a problem as it can print as many yen as it wants. Hence the UK has to avoid deflation at all cost. Unfortunately, there's no way of stopping the excess cash from going into other assets such as housing.

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I worked out my own personal rate of inflation the other day.

This was based on accounts taken over the last couple of years and on items I actually buy. I have largely ignored discretionary spending (like holidays abroad and i-pods) as I do not make these sorts of purchases - I am saving up for a deposit on a house you know.

I came up with a rate of +5.5% YOY.

I included food items, however I have been making savings in this area (no more luxury items) and the amount I spent on food has actually gone down over the past couple of years.

Taking this out of my calculation, I got a rate of +8% YOY.

(Official CPI=2.5%)

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I worked out my own personal rate of inflation the other day.

Taking this out of my calculation, I got a rate of +8% YOY.

(Official CPI=2.5%)

...and has your yearly wage increases kept up with your personal rate of inflation?

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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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