Monday, September 25, 2006

Which way for IRs? It Could Be Down!

Will the Bank of England raise rates again?

Jeremy Batstone of Charles Stanley on what the latest inflation data, MPC minutes and consumer attitudes suggest about November's interest rate decision. Basically, CPI should not be used; people's expectation of inflation is lower [yes, lower] then real inflation levels; and there is insufficient investment in UK Manufacturing to take on emerging economies in Asia. A bit of a surprise article from MoneyWeek which provides an alternative view.

Posted by talking rot @ 12:22 PM (587 views)
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8 thoughts on “Which way for IRs? It Could Be Down!

  • C'mon Correction says:

    I wouldn’t be surprised if CPI is ‘massaged’ down again Oct/ Nov, and slower growth and cheaper oil they will say prevents a need for rate hike. The question is how committed the BOE is to tackle HPI, after that stupid rate cut last year and Gordon pulling the strings it is hard to beleive they are at all. I hope I’m wrong, but I’m getting increasing cynical about the level of control over public perception, most people i speak to think everything is right with the economy. I really believe some major factor has to ‘force the hand’ before we’ll see a crash in the near-term.

    And another thing – why the pound is so strong baffles me, anyone explain? Oil is dropping yet sterling is holding strong?

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  • Strange for someone to be saying this will harm UK manufacturing a week after the CBI came out to say inflation was a bigger risk than the effect on industry

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  • I hope they dont go down – Jeremy Batstone probably saying this as he as just taken out a £1.3 million mortgage and has a vested interest!!

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  • Great idea. Lower rates and trigger another credit boom, increase the money supply and put the inevitable crisis off for another few months.

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  • “and there is insufficient investment in UK Manufacturing to take on emerging economies in Asia…” When is the media going to finally realize that UK manufacturing will never compete against the cost advantages of Asia… In other words we need more Government investment “spending” to prop up failed manufacturing, remember British Leyland.

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  • Politicians of the developed world . . . you have enjoyed low inflation at the expense of Chinese slave labour and fixed forex rates . . . NO MORE!!!! As the cost of production rises in the Far East and the real aims of the Communists become clear, there will be an interest rates race between US/EU/US etc to maintain curency value in a vain attempt to control inflation in consumer products, since we no longer make anything here any more. This will ultimatley lead to the collapse of UK/US economies, as the credit fuelled boom has masked the decline of our productive industries and our capability of manufacturing our way out of poverty.

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  • C’mon Correction, One reason for the strong pound is that various central banks have chosen to increase the amount of sterling they keep as reserve currency, while selling dollars.

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  • C'mon Correction says:

    Thanks Dutch, I’m really starting to learn more reading this blog regularly, however….

    It doesn’t encourage me that the UK economy is seen worldwide as a safe bet at the moment. We have a massive asset bubble in the form of our housing market, a huge 1.25 Trillion national debt & rising fast, a government that is also to its eyeballs in debt, our inflation is only low to a huge influx of foreign workers(that is already reaching it’s sustainable limit – both socially & economically), our oil production is dropping, manufacturing is dropping, a health care system that is unsustainable, unemployment is rising……… the list goes on with very few positives to point to in the future. These are facts, take the ‘spin’ off some of them and they will look even worse.

    America is worse in many areas, better in others, what about all the other major nations? Isn’t it much safer to hold other currencies rather than Sterling? Please teach me otherwise people ‘cos as a novice to the complexities of world economics – “I don’t get it” !!

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