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Mpc Decision This Week


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If I recall it was a 7-1 vote in favour of a rates RISE last month - Even though there were only 7 members, but hey. Why believe anything you read :)

I was curious to see if people think the bank will strike, whilst the IRONS hot and SHOCK the financial system by showing they are combatting inflation.

Thoughts please.....


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Personal view: Central banks risk letting inflation genie out of bottle

By Ruth Lea

(Filed: 04/09/2006)

Last month the Bank of England, to the surprise of many, raised interest rates from 4.5pc to 4.75pc.
Even though there had been voices, not least of all from the shadow monetary policy committee (of which I am a member), for higher rates in response to the pick-up in inflation, strong economic growth and rapid increases in money supply, expectations of a move by the Bank were low...../
Since the August meeting the economic news has fully supported the Bank's strike. House prices look very warm, supported by a strong pick-up in mortgage lending. And a recent survey by Citigroup suggests that the general public's near-term inflation expectations are rising.
Interest rates are surely set to rise again. The favoured month in the markets is November, at the time of the Bank's next Quarterly Inflation Report.
But I would not rule out the possibility of another hike this week, with rates up to 5.25pc by end-year.
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.... its only been 3 weeks since the rate rise and the effects are yet to filter through, so I'd be looking at a rise in Oct/Nov

If they are waiting for the effect of Augusts rise to filter through they may as well go away till next summer. It take 9-12 months for the effect of rate change to show. All the inflation, rocketing M4, HPI, "mini-boom" is last Augusts rate cut materialising.

IMO they need to raise them 0.25%, better still 0.5% this week

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If there was the spectre of inflation at less than 1% the Bank would impliment consecutive rate reductions without a debate.Now we look f***ed for 3% because of the rise in M4 and the public's perception that inflation is more like 10%.One rule for 1% another rule for 3%,its just unbelievable.

The panel that f***ed up in August 2005 with that stupid reduction should all be sacked.One suspects they all hold valuable property and large mortgages and their decisions are not without self-interest.

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Do you think the prospect of the two new members joining in October will make the current committee more or less likely to act this month with another increase?

Far more likely to push through a rise. Once Brown's doves are onboard we'll see them, and the other newbie Blanchflower, voting for hold/cuts along with a VI spin-fest about how "MPC is split" "rates have paused/peaked" "BoE divided on inflation threat"

Edited by jp1
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Bloomberg poll says no.


Bank of England May Keep Rate Unchanged This Week (Update2)
By Laura Humble
Sept. 4 (Bloomberg) -- The Bank of England will probably leave its benchmark interest rate unchanged this week after a surprise increase last month, a survey of economists shows.
Policy makers led by Governor Mervyn King will keep the rate at 4.75 percent following a quarter-point increase on Aug. 3, according to
49 economists in a Bloomberg News survey.
The bank will announce the decision at noon on Sept. 7 in London and publish minutes of the meeting Sept. 20.
The U.K. economy expanded at the fastest pace in two years in the second quarter, prompting the central bank to raise its estimates for growth and inflation for 2006. Investors are betting on one more rate increase by December to wring out inflation pressures, futures trading suggests...../

100% result for no hike.

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Guest Alright Jack

I want to try and bring this thread from the abstract into the real world.

Do you really understand what you're talking about? (I think NOT in many cases!) Do you practise what you preach?

Complaining about interest rates being too low and yet at the same time holding a large proportion of your wealth in cash / deposit or bonds is plainly living in confusion and denial. You are infact saying to the Bank of England that you are happy with the status-quo. Do you understand the consequences of being the last person to jump ship?

Practise what you preach. Take action. Let's debate from a real world perspective and not just jaw-bone.

I'll begin. I believe that interest rates are FAR lower than the real rate of inflation. I go as far as to say that the CPI and most the government numbers have been spun to total irrelevance. They are outright lies because the underlying economic situation is extremely dire.

For these reasons I vote with my feet by holding only very little currency.

Thank you.

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Far more likely to push through a rise. Once Brown's doves are onboard we'll see them, and the other newbie Blanchflower, voting for hold/cuts along with a VI spin-fest about how "MPC is split" "rates have paused/peaked" "BoE divided on inflation threat"

I would like this to be true.

I voted for hold this time although I do expect a rise later this year.

A 0.25 hike on thursday would be extremely funny and a real kick in the nuts for NUlab!!!

.....sock it to 'em merv!!!!!!!!

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And this a few days earlier:

I want to try and bring Alright Jack into the real world!.

Gold as an asset has finished it's bull run and will go down with the housing market - ie. you will lose money. Lets have a look at what happened to gold last time with much higher inflation in the economy. Below is inflation figures from the time of the last crash:

'88 4.9%

'89 7.8%

'90 9.5%

'91 5.9%

'92 3.7%

Here's a link showing DrBubbs gold graph:


Oh, look what happens to gold when there's inflation - it goes DOWN!. Invest too much in gold and you risk losing a lot of your wealth - cash IS king and will perform better than gold if invested correctly. If gold was going to go much higher then it would have done so by now - I think we are past the equivalent point in the housing market to 1988 when the gold price last peaked. With inflation being targeted by the central banks there's little to worry about with regards to preserving your wealth. What you should worry about is having your wealth tied up in assets such as housing and gold which will plumet when confidence goes.

By the way - the gold graph is not inflation adjusted so imagine how it would look then? :ph34r::rolleyes:

I personally don't see gold as a hedge against inflation, but more another assest that is vulnerable to speculative activity like any other asset and capable of becoming a bubble that eventual pops.

catflap,right idea mate but wrong cycle.

Gold price cycle and commodities in general have about a 40-year cycle...20 up,20 down.

so do interest rates and they are approximately inverse.

it's not exact because inflation/deflation always precedes decisions on IR.

oil,gold,commodities have ALL been rising since 2002.

global IR's started rising nearly a year later.

if we see a marked fall in the price of commodities then we might see IR's getting cut.

...but the charts for gold/copper etc all look like they are gonna break higher.

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