Interest Rates Could Hit 7.5%

[ripandcap]

http://www.telegraph.co.uk/money/main.jhtm...inflation24.xml

[Realistbear]

http://www.telegraph.co.uk/money/main.jhtm...inflation24.xml

With a savings account possibly about to pay 7% ++ and BTL struggling to make 3% says it all really.

All things are cyclical. BTL had its day and now its over. It was never meant to last forever and, as a speculative investment, it was always subject to Buffett's pendulum analogy (below). Gotta know when to buy and when to sell. He who holds too long get burned.

[Rachel]

be great for my savings! woot!

[music man]

I feel we'll see 8% IR's.

It's just the business cycle, lol.

[IDN]

yea- they could reach 7.5%- but can you really see the current mpc team letting this happen? they are incompetent(sp?) aren't they?

[winkie]

What will be will be, just prepare yourself for the worst, anything better than that will be a bonus.

[Goldfinger]

With a savings account possibly about to pay 7% ++ and BTL struggling to make 3% says it all really.

All things are cyclical. BTL had its day and now its over. It was never meant to last forever and, as a speculative investment, it was always subject to Buffett's pendulum analogy (below). Gotta know when to buy and when to sell. He who holds too long get burned.

I can not see any reason why interest rates should stay as low as 7.5%.

Remember, the average IR in the UK is rather 8%. And all looks as if we're entering inflationary territory

similar to the 70s/80s again. So, expect double digits.

Edited June 3, 2007 by Goldfinger

[Goldfinger]

yea- they could reach 7.5%- but can you really see the current mpc team letting this happen? they are incompetent(sp?) aren't they?

They'll have no choice, otherwise they will be known as the MPC that destroyed Sterling.

Edited June 3, 2007 by Goldfinger

[insidetrack]

If the BoE had any competance it would raise rates to 7% on Thursday. Get some reality back.

Edited June 3, 2007 by insidetrack

[Slumpmonkey Returns]

I loved this bit:

Mr King's comments were a veiled criticism of the doveish faction on the MPC, many of them political appointees picked by Chancellor Gordon Brown. Insiders at the Bank are said to be particularly scathing about the choice of David Blanchflower, best known for his academic opus Money, Sex and Happiness, an area of research viewed as frivolous by monetarists.

Wasn't it Casual Observer who always argued that the MPC were independant?

Don't worry bulls it will never happen (rates at 7 per cent). Gordy will instruct the "independant" Office of National Statistics to take out fruit and vegetables from the basket of goods to be replaced with more Far Eastern tat such as iPods and microwaves. He will also instruct the MPC to forget about M4 money growth:

"Look in to my eyes, look into my eyes (not around the eyes, not around the eyes but into my eyes)"

"As an economist you will forget about money supply growth do you understand?"

"Furthermore, in October 2007 you will lower rates if the housing market is tanking! Do you remember in August 2005 when I threatened to have you fired if you did not do as I said? You all answer to me - understand?"

Yeah, about as independant as the Russian state duma!

[BuyingBear]

yea- they could reach 7.5%- but can you really see the current mpc team letting this happen? they are incompetent(sp?) aren't they?

It all depends on Sterling, if we see the carry trade unwinding and sterling takes a hit this will drive input inflation for our imports. I'd say our fate is firmly in the hands of the BoJ.

[lewissheridan]

I loved this bit:

Wasn't it Casual Observer who always argued that the MPC were independant?

Don't worry bulls it will never happen (rates at 7 per cent). Gordy will instruct the "independant" Office of National Statistics to take out fruit and vegetables from the basket of goods to be replaced with more Far Eastern tat such as iPods and microwaves. He will also instruct the MPC to forget about M4 money growth:

"Look in to my eyes, look into my eyes (not around the eyes, not around the eyes but into my eyes)"

"As an economist you will forget about money supply growth do you understand?"

"Furthermore, in October 2007 you will lower rates if the housing market is tanking! Do you remember in August 2005 when I threatened to have you fired if you did not do as I said? You all answer to me - understand?"

Yeah, about as independant as the Russian state duma!

classic lmao

[OnlyMe]

That rate cut....

http://findarticles.com/p/articles/mi_qn41...23/ai_n16508336

The report also showed the Bank had successfully exploited the surge in bond prices. It raised the share of bonds in its portfolio from 35.0 to 39.3 per cent between 2005 and 2006, while the value of that holding surged 33 per cent to pounds 749m. Its equities portfolio jumped almost 10 per centtopounds 999m

[Goldfinger]

I loved this bit:

Wasn't it Casual Observer who always argued that the MPC were independant?

Don't worry bulls it will never happen (rates at 7 per cent). Gordy will instruct the "independant" Office of National Statistics to take out fruit and vegetables from the basket of goods to be replaced with more Far Eastern tat such as iPods and microwaves. He will also instruct the MPC to forget about M4 money growth:

I think many people will be disappointed in this respect. "Far Eastern tat" will become expensive, very expensive. 25 years of cheap tat have

deluded the masses into thinking this could never change. No, there will be no good way manipulating CPI around that. Rates will go over

10% at some stage, and then only the blue sky will be the limit.

Edited June 3, 2007 by Goldfinger

[OnlyMe]

I think many people will be disappointed in this respect. "Far Eastern tat" will become expensive, very expensive. 25 years of cheap tat have

deluded the masses into thinking this could never change. No, there will be no good way manipulating CPI around that. Rates will go over

10% at some stage, and then only the blue sky will be the limit.

The Crap Plastic Index is going to be in trouble. Not even the Chinese will work if the increase in their living standards means that they can no longer afford basics that they could before.

http://www.msnbc.msn.com/id/19000114/site/newsweek/

Worst Sign Yet

The price of bacon and eggs in China is soaring, another worrisome indicator the economy may overheat.

Pricey Pig: The cost of pork in China was 71 percent higher in April than a year earlier

By George Wehrfritz

Newsweek International

June 11, 2007 issue - China's prime minister, Wen Jiabao, sounded the alarm during an inspection tour of Shaanxi province. In the face of a serious nationwide pork shortage, he urged farmers on May 26 to deliver "meat that is affordable to our city folk," and warned of social instability should they fail. Whether the main culprit is a mysterious ailment that's killing swine in droves, or simply a surge in demand for China's favorite protein, the wholesale price of pork in the country was 71 percent higher in April than it had been a year earlier. According to Ministry of Agriculture statistics, consumers are now paying 29.3 percent more for pork products and 30.9 percent more for eggs, and in recent weeks the Chinese media have chronicled steep price hikes for beef, fish and chicken—all indications that inflation, which officially hovers at a benign 3 percent, could actually be running significantly higher.

[Ash4781]

The Crap Plastic Index is going to be in trouble. Not even the Chinese will work if the increase in their living standards means that they can no longer afford basics that they could before.

http://www.msnbc.msn.com/id/19000114/site/newsweek/

Worst Sign Yet

The price of bacon and eggs in China is soaring, another worrisome indicator the economy may overheat.

Pricey Pig: The cost of pork in China was 71 percent higher in April than a year earlier

By George Wehrfritz

Newsweek International

June 11, 2007 issue - China's prime minister, Wen Jiabao, sounded the alarm during an inspection tour of Shaanxi province. In the face of a serious nationwide pork shortage, he urged farmers on May 26 to deliver "meat that is affordable to our city folk," and warned of social instability should they fail. Whether the main culprit is a mysterious ailment that's killing swine in droves, or simply a surge in demand for China's favorite protein, the wholesale price of pork in the country was 71 percent higher in April than it had been a year earlier. According to Ministry of Agriculture statistics, consumers are now paying 29.3 percent more for pork products and 30.9 percent more for eggs, and in recent weeks the Chinese media have chronicled steep price hikes for beef, fish and chicken—all indications that inflation, which officially hovers at a benign 3 percent, could actually be running significantly higher.

Are these priced on that Chicago exchange ?

[OnlyMe]

Are these priced on that Chicago exchange ?

Belly Pork is and Lean Hogs or somesuch.

I think Chinese pricing of goods being quoted here howver, is the effective internal price and has little to do with global prices - in fact they have slapped a "health issue" based import ban on South American pork, kind of helps them now, not!

[Guest Bart of Darkness]

Wasn't it Casual Observer who always argued that the MPC were independant?

"Pedantic Pete" (© GOM 2007) did use to trot that out on a regular basis yes. Maybe he even believed it, poor soul.

[jonpo]

the problem is that each ounce of pork needs sveral ounces of grain and grain prices are shooting up

I bought a load of wheat about a month ago as a hedge to global warming and its showing me some very healthy profits.

[laurejon]

I think the interesting thing here is that money supply increased by 13% over the past twelve months.

That is a huge amount of money flooding in to the market, and its all debt.

[Senor Miguel]

the problem is that each ounce of pork needs sveral ounces of grain and grain prices are shooting up

I bought a load of wheat about a month ago as a hedge to global warming and its showing me some very healthy profits.

nice one, just out of interest how did you go about that?

Edited June 3, 2007 by Senor Miguel

[jonpo]

futures (spreadbet wrapper).

[Guest grumpy-old-man]

"Pedantic Pete" (© GOM 2007) did use to trot that out on a regular basis yes. Maybe he even believed it, poor soul.

[Guest grumpy-old-man]

hey, on a serious note though, I took this from the article by op:

""You can't get away with money supply growth of 12pc or 13pc like this. It's not as bad as earlier cycles, but it is nevertheless bad and it's going to end the usual way. Rates will have to go to 6pc to 6.5pc, and may have to reach 7.5pc," he said."

I have a question on money growth, what has the money printing run been like in comparison with the crash in the 90's ??

[Wait & See]

If the BoE had any competance it would raise rates to 7% on Thursday. Get some reality back.

Spot on.

Wish the BOE would get their finger out and do what needs to be done.

Inflation needs to be crushed, along with HPI and unfortunately, the economy.

It's the only way out now.