Jump to content
House Price Crash Forum
Sign in to follow this  
Realistbear

E C B Indicates More Hikes Are On The Way

Recommended Posts

http://www.rte.ie/business/2006/0804/ecb.html

ECB warns more rate hikes are likely

August 04, 2006 07:24
The president of the European Central Bank has warned that euro zone interest rates are likely to rise further, after the bank raised interest rates by a quarter of a percentage point to 3% yesterday, to target inflation.
Speaking at a news conference after the rate meeting Jean-Claude Trichet said that euro zone interest rates 'remain low by historical standards' and a further 'progressive withdrawal of monetary accommodation remains warranted'.

Tick tock--can you hear the clock tick a little louder each day? :o

Share this post


Link to post
Share on other sites

Enough to slow down people spending/living standards for the next 20 years whilst not crashing the housing markets worldwide

Share this post


Link to post
Share on other sites
Guest Alright Jack

How high are rates/inflation expected to go up to?

1. Inflation.

Inflation will continue spiralling upwards. It has to keep the system solvent. If not, the system implodes and its over for the currency (fiat money cannot survive a deflation - if that were even desirable by the central bank)

2. Interest rates.

Central banks do not target inflation (money supply) with IRs - this wouldn't make sense. Central banks by their nature are inflationary. The use of IRs is to target demand. This is very important to understand. The value of any asset (nominal or real) depends on two things, market supply and market demand. Since central banks don't consider supply (they actually exist to pyramid the supply of credit) it must try to make sure demand for the currency remains strong or the value of the currency collapses.

So your answer is this. Inflation will never go away and will only get worse. The end can be put off repeatedly by taking some pain and disinflating to a certain extent, IR will be forced up to save the currency from outright collapse each time this happens. Ultimately though, the end will come. I don't know when that day will be but I think we are in line for a severe devaluation which sterling may or may not survive for the next round.

Please try to understand that IR rises do not 'fight inflation' it serves to try to prop up demand and ameliorate the devaluation associated with continuous monetary inflation.

Share this post


Link to post
Share on other sites

I don't know when that day will be but I think we are in line for a severe devaluation which sterling may or may not survive for the next round.

When you say sterling may not survive, what exactly do you mean?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.