Mpc Experts Hint Rates Will Rise Again

[Guest The_Oldie]

http://www.thisismoney.co.uk/news/article....e_id=2&ct=5

A further rise in interest rates to 6% could soon be on the cards, according to leading members of the Bank of England's Monetary Policy Committee.

.....But it now looks as if a further rise might even be possible as soon as August, when the next Inflation Report is issued.

His comments seemed to be echoed by deputy governor Sir John Gieve who expressed doubts as to whether the Bank had done enough yet to bring inflation back to the 2% government target......

[OzzMosiz]

Music to my ears!!

[Levy process]

GAME ON!

[Fudge]

If the inflation report in August shows a rise. The shit will really hit the fan!

[Guest Winnie]

Plus, I assume they cannot just change the inflation target (soem of us have feared in the past), becasue that would mean a massive public sector pay revolt, and spiralling private sector pay demands which would just perpetuate the problem?

[DoctorJ]

What base rate did property bulls agree would bring this market down? oh yes I remember

"Q3 2007: This is when the real fun and games begin"

Edited July 11, 2007 by DoctorJ

[dirge]

They'll never raise next month, no chance. They'll hold out next month release dodgy figures and claim its slowing and showing signs it will reverse soon or some crap like that.

I'll panic too many people

[Objective Developer]

I hate to pee on bonfires, but hinting is sometimes preferred to raising, as it sends the signal to the masses without the need to upset the old boy network in the city. How is Sterling doing on the back of this? If it is being taken seriously, then we should see a rise?

[AteMoose]

No change is an almost dead cert this month (check betfair), we will be moving to 6% but not yet.......

[The Ayatollah Buggeri]

The next CPI figure is due out on Tuesday (according to this page). Unless it's significantly up (unlikely, I'd guess, because food and oil price increases haven't really filtered through into the consumer economy yet), that'll be all the justification needed for a hold.

[Smell the Fear]

No change is an almost dead cert this month (check betfair), we will be moving to 6% but not yet.......

Why do you put so much faith in betfair? It is merely a reflection of opinion rather than a crystal ball predicting the future. I got 8/1 on a raise 2 days before the surprise January rise.

The odds currently at 1.07 gives a 7% return in 3 weeks, annualised and compounded that is a return of over 400%, you don't get that for no risk!

[It is different this time]

.....But it now looks as if a further rise might even be possible as soon as August, when the next Inflation Report is issued.

Bring it on! but I don't think they have the balls for two consecutive month of rise

[The Ayatollah Buggeri]

...but if the next CPI figure is up and they don't hike, that won't do much for the pound...

[bomberbrown]

Bring it on! but I don't think they have the balls for two consecutive month of rise

Well, Lomax hasn't

[IDN]

Bring it on! but I don't think they have the balls for two consecutive month of rise

i cant see them raising rates again next month- the voters have made it clear that they dont like rate rises- GB wont want to have waited 10 yrs to get his dream job, only to lose it 12 months later- i think they'll hold and then after they could spin the figures and even reduce the IR rates ?

[The Ayatollah Buggeri]

If they do, the pound will tank.

[0q0]

Well, Lomax hasn't

I'd have thought if they raise to 6% it'll be done in Sept or Oct to not spoil The Festive Period of Commercemas.

[Fancypants]

I'd have thought if they raise to 6% it'll be done in Sept or Oct to not spoil The Festive Period of Commercemas.

I concur with your conclusion and your reasoning, although, as usual, this is subject to change! 6% by year end, with a slight possibility of 6.25%. 6% will be "enough" in my view, although anything higher will help to speed things along, which is in everyone's long-term interest really.

I feel that 6% is an important psychological barrier and one that will be breached well in advance of yule. Seems that the MPC are making sure people realise that rates are going to keep going up for the time being. Once they reach 6%, they only need to stay there or above for a year to crush the puny housing market for a generation. The MPC will undoubtedly reach a level then freeze between the rock and the hard place, much like the Fed has done.

[benj]

i cant see them raising rates again next month- the voters have made it clear that they dont like rate rises

The Bank of England's Monetary Policy Committee are not elected, so they don't (or shouldn't) give a rat's áss what "the voters" think. If Merv doesn't want to be writing to GB every month explaining why inflation has run away and a wage-price spiral is looming, they're going to have to pull the lever sooner or later.

Personally though, I also think the chance of a second rate rise in as many months is pretty slim. They have made it clear that they don't want to scare people, and they don't want to be seen as jumping the gun. The fact that people need to be scared doesn't seem to have occurred to them yet.

[dog]

Kenneth Clark was on the radio the other day saying that he reckoned that interest rates took about a year to work themselves out. The MPC have tip toed their way throught these rate rises to no good effect. In a years time, I suspect that interest rates will still be dribbling upwards.

The government only really cares about wage inflation. Wage inflation is driven by 'steady state' inflation and 'accumulated inflation'. Steady state inflationary pressures work themselves out as they go along. Other things like house prices can get ahead of themselves and represent a huge accumulation inflationary pressure. The proplem does not go away if house prices stop rising. The inflationary pressure only goes away if house prices fall to more affordable levels.

[Nationalist]

The annoying thing is that because they've raised the IRs in tiny increments rather than a few big impact jumps they are going to have to raise them higher than they would otherwise. Quarter point rises just don't have the psychological effect required.

And remember, every successive 0.25% rise is a smaller relative rise than the previous. When they moved from 3.5 to 3.75 that was a 7.1% rise, but when they move up to a 6.0 base rate that will only be a 4.3% rise, ie, not much more than half the effect.

[crashmonitor]

I think most members on this forum want their cake and eat it,increasing rates and falling house prices;but the way the economy is looking I reckon we are only going to get the former this year with the rates finally sinking the housing market in 2008.And surely this is the best chance of a correction,rather than a no mans land situation of 2005 with falling prices but with rates too low to make them stick.I think most Bears should be relaxed about further HPI advances as it will make those rate rises an inevitability*.(I am starting to see the positive side of the indicies going up and think that the Bulls who celebrate the advances are turkeys celebrating Christmas)The problem is that all that free dosh that the MPC has printed to boomers like me is now beginning to escape into the wider economy.Even a once in a century monsoon couldn't stop a stellar rise in consumer spending of 3% in June.Those boomers just couldn't wait to get down to their Building Societies and exchange a MEW for a new kitchen.We've just got to accept that Fred Harrison's end game is upon us and the MPC can no longer stop the spending and they are going to have to correct the greedy public in the most severe fashion with punishing rates.

*anyway the 11% HPI growth and 6% yield on savings are historical.If HPI falls to about 6% by next Spring ,then Spring 2007 was the moment that savings replaced houses as the place to be, like two ships that passed in the night with Houses heading South and Savings heading North.

Edited July 11, 2007 by crashmonitor

[Flat Bear]

I think most members on this forum want their cake and eat it,increasing rates and falling house prices;but the way the economy is looking I reckon we are only going to get the former this year with the rates finally sinking the housing market in 2008.And surely this is the best chance of a correction,rather than a no mans land situation of 2005 with falling prices but with rates too low to make them stick.I think most Bears should be relaxed about further HPI advances as it will make those rate rises an inevitability*.(I am starting to see the positive side of the indicies going up and think that the Bulls who celebrate the advances are turkeys celebrating Christmas)The problem is that all that free dosh that the MPC has printed to boomers like me is now beginning to escape into the wider economy.Even a once in a century monsoon couldn't stop a stellar rise in consumer spending of 3% in June.Those boomers just couldn't wait to get down to their Building Societies and exchange a MEW for a new kitchen.We've just got to accept that Fred Harrison's end game is upon us and the MPC can no longer stop the spending and they are going to have to correct the greedy public in the most severe fashion with punishing rates.

*anyway the 11% HPI growth and 6% yield on savings are historical.If HPI falls to about 6% by next Spring ,then Spring 2007 was the moment that savings replaced houses as the place to be, like two ships that passed in the night with Houses heading South and Savings heading North.

I would agree with much of your analysis.

It could well be we are less than 18 months away from the start of a prolonged recession.

Mpc Experts Hint Rates Will Rise Again

I had to smile at this discription of the MPC members, "police intelligence" or when someone described an amateur as being very professional to me the other day had the same effect.

[Guest grumpy-old-man]

No change is an almost dead cert this month (check betfair), we will be moving to 6% but not yet.......

isn't it a bad state of affairs when we look to the bookies to see what our masters of finance are going to do.