Wednesday, Sep 13, 2006

One more interest rate hike this year may not be enough

MoneyWeek: Why one more interest rate hike this year may not be enough

August saw inflation come in above target and above expectations once again. Consumer price inflation hit an annual rate of 2.5% last month. Analysts had expected 2.4%. It now looks as though inflation will exceed the Bank of Englands forecasts for the third quarter - and that makes a fresh rate rise by November seem even more likely.

Posted by mary @ 11:11 AM (528 views)
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6 Comments

1. talking rot said...

The articles by MoneyWeek are very good and normally I see the logic behind them. However, I used to say the same thing about articles written in The Economist. Predicitng the future is difficult and I just don't buy the concept of rising interest rates. Sure there are risks facing the economy, but most of the risks have been present for some time now and they still haven't occurred.

Wednesday, September 13, 2006 12:59PM Report Comment
 

2. rich said...

You mention that the economic risks currently present have not yet had an effect. There are plenty of examples of this in economics (bubble psychology) and the natural world (critical mass, tipping points) so I don't follow why these economic risks are somehow no longer risks.

Can you explain why this article is incorrect or is your opinion just based on a feeling?

Wednesday, September 13, 2006 01:36PM Report Comment
 

3. Titch said...

Talking rot and Uncle Chris: you asked about the repossession auctions. The web site I used is www.homepge.net/uk/property_auction [the word "homepage" is spelt as I have written in the address ie without the "a". I had been along to the Barnard Marcus one at the Cafe Royal London, at the end of July. They announced the extra auction at that. You can send off for the catalogues for free. I believe the ones for sale marked by order of the mortgagees indicate repossessions. This particular catalogue were all marked in this way! I don't doubt that these "extra auctions" are likely to be a regular occurance if news like today's continues! Happy bidding!

Wednesday, September 13, 2006 08:23PM Report Comment
 

4. talking rot said...

rich

Thank you for your comment on "MoneyWeek: Why one more itnerest rate may not be enough." I am not disputing the validity of the article. My concern [and frustration] stems from seeing a large number of articles within many quality publications which have predicted a House Price Crash on the basis of risks. Risks are things which MAY or MAY NOT happen. As a result many quality publications like MoneyWeek and The Economist, have rightly pointed out economic risks that MAY cause a House Price Crash.

The thing is, there is no sign of a House Price Crash in their area where I rent (Hampshire) or the area where I am looking to buy in a few years (North Yorkshire). Quality publications have made predictions on the basis of things [risks] occurring when there is no certainty that they will occur. As a result these predictions have not come true. We can only debate the likelihood of these risks occurring and what the outcome on House Prices MIGHT be.

I recall some learned economist stating "When the facts change, I'll change my mind" or something similar. It is a fact that there is no House Price Crash today. There are economic risks which MAY or MAY NOT cause one tomorrow. When the risks cease being a possible future event and become an actual current event, then the facts will have changed.

Thursday, September 14, 2006 10:28AM Report Comment
 

5. rich said...

Talking rot,

Makes sense, thanks for clarifying.

Thursday, September 14, 2006 11:25AM Report Comment
 

6. Sam. said...

I agree while there isnt a sign of a countrywide HPC, there are fluctuations around the country, which point to a volatile market but nothing which points to a crash. However in economic terms the housing market is following bubble economics just like previous booms most recently the .com boom so what economics tells us is that unless this is the exception which dis-proves the rule were going to see a crash at some point in the future.

During any crash you will see that there will still be a market for certain types of homes/buildings. These will be areas where the people interested are outside the mainstream. E.g. The cash rich, or super rich who will be able to buy property outside the banking system.

Thursday, September 14, 2006 12:18PM Report Comment
 

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