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Inflation To Climb Well Over 4%, Bank's No2

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PDF link

http://www.bankofengland.co.uk/publication...8/speech353.pdf

Is it right to conclude, as some have, that the path of inflation is determined

abroad? Certainly commodity prices have an effect in the short run.

After 15 years of unbroken growth and low inflation, the prices of clothing

and footwear fell by almost 8% over the past year. And the price of durable

goods like plasma TVs has been falling even faster.

We have no direct lever on public expectations. We need not just to assert our

determination to bring inflation back to target but ensure that our words are

credible. Most importantly, the sharp increases in commodity prices are squeezing

real take-home pay which is bound to impact on consumption at some point?

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So with inflation at double their target will the MPC finally grow some cajones, stick to their remit and do what they should have done last month and raise rates to protect the value of our currency and savings ?

It seems the banks think not which is why swap rates have been falling recently.

Criminal really - what can you do ?

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The fact is in all this mess if it is possible to salvage one thing, it has to be sterling.

As long as sterling is reasonable strong there is some light at the end of the tunnel when the recession/depression is over. If sterling starts falling significantly more from here the BoE must raise rates.

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i dont think they want a strong sterling.

were moving away from a service economy back to manual labour.

granted, raw costs will rise, but not as much as the reductions in global labour costs.

if you think we got tramped on during the industrial revolution - get ready for more back breaking mill work.

alcohol used to be the thing that got people up and desperate.

now its debt. to keep you in the debt-work trap, sterlings global price means little.

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has it ever occured in the past that the bank of england rate (or historical equivilent) was lower than the rate of inflation? we're not *that* far off it now, and while i'm perfectly happy to only be paying 1% real value on my mortgage (and loads of people on long fixed rates from 2-3 years ago finding their debt actually decreasing in real terms), i guess the bank won't be so chuffed?

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has it ever occured in the past that the bank of england rate (or historical equivilent) was lower than the rate of inflation? we're not *that* far off it now, and while i'm perfectly happy to only be paying 1% real value on my mortgage (and loads of people on long fixed rates from 2-3 years ago finding their debt actually decreasing in real terms), i guess the bank won't be so chuffed?

In the 1970 crash RPI was hitting 26% / 10% interest rates

1983 had 3.7% RPI / 11% interest

It switches around a lot all through.

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http://www.guardian.co.uk/business/2008/ju...r.interestrates

Bank of England deputy governor Sir John Gieve said today he could not rule out a UK recession and admitted that the credit crunch had cancelled out any benefits from the Bank's last three interest rate cuts.

But the interest rate cuts where to benefit the economy, stupid.

However increasing interest rates now would be economic suicide, the idea is to chuck a few northerners over the side, not most of the country and certainly not in the south.

“Northern unemployment is an acceptable price to pay for curbing southern inflation” Eddie George former Governor of the Bank of England

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http://www.guardian.co.uk/business/2008/ju...r.interestrates

But the interest rate cuts where to benefit the economy, stupid.

However increasing interest rates now would be economic suicide, the idea is to chuck a few northerners over the side, not most of the country and certainly not in the south.

“Northern unemployment is an acceptable price to pay for curbing southern inflation” Eddie George former Governor of the Bank of England

Is that Eddie George quote for real? :blink:

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http://findarticles.com/p/articles/mi_qn41...24/ai_n14184302

The Express

CRASS. STUPID. Offensive ... yes, all those and more. Eddie George's comments that lost jobs in the North are an "acceptable price to pay to curb inflation in the South" are breathtaking in their insensitivity. The charitable view is that Mr George had enjoyed too good a lunch. But unfortunately, the more likely explanation is that his remarks reveal all too clearly the mindset not just of the Governor of the Bank of England but of many of his colleagues.

It has been obvious to most objective observers of the economy that Britain is either heading for, or on the verge of, a major recession. Yet Mr George's response has been an ostrich-like failure to acknowledge what is going on around him. A quarter per cent cut in interest rates is not enough. Many commentators have wondered just why Mr George has seemed so insouciant to the problems of manufacturing. His comments yesterday show that he simply doesn't care. u Yorkshire Post EDDIE GEORGE let the cat out of the bag. The price for keeping inflation down to the Government's target is higher unemployment. But the Governor of the Bank of England should not be left to take the rap for the growing rash of job losses in northern-based manufacturing firms. The ground rules for the Bank's monetary policy committee were devised by the Chancellor, Gordon Brown, not the old lady of Threadneedle Street. Yet the Chancellor, who lectures others about personal responsibility, stubbornly refuses to accept his policies are causing pain in Labour's heartlands. u Daily Mail MR GEORGE was hit with a sucker punch he ought to have seen coming a mile off. A figure of his eminence should know better than to give the impression that he thinks northern unemployment is an acceptable price to pay for curbing southern inflation. Still, however crassly he chooses to say that interest rates suitable for one area might be unsuitable for another, he makes an important point, which should be borne in mind as the diverse regions of Europe yoke themselves together in the single currency. The potential for pain and resentment will be even greater.

All too true I'm afraid, it's amazing how this has been suppressed in the press and not revisited.

This is the problem with interest rates, how can the North move away from dependence on Govt jobs when the Govt's own economic policy is to ditch Northern jobs to curb inflation in the South.

As I keep saying a single interest doesn't work.

However some of us don't forget what has been said.

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http://findarticles.com/p/articles/mi_qn41...24/ai_n14184302

All too true I'm afraid, it's amazing how this has been suppressed in the press and not revisited.

This is the problem with interest rates, how can the North move away from dependence on Govt jobs when the Govt's own economic policy is to ditch Northern jobs to curb inflation in the South.

As I keep saying a single interest doesn't work.

However some of us don't forget what has been said.

Yes, well aware of the problems with a single interest rate. I have just come back to Uk after years of living in Ireland. Rates there needed to be much higher than they have been over the last 10 years. If you think we had a bubble, you should see Ireland !

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  • 399 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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