Monday, Oct 16, 2006

Still on for November rise

Reuters: Lower Sept inflation may not prevent UK rate rise

Lower Sept inflation may not prevent UK rate rise

Posted by holding out @ 02:30 PM (538 views)
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1. paul said...

Well, I don't know ...

They always seem to latch on to any excuse not to do anything, so a rate hold wouldn't surprise me (economic competence aside).

Monday, October 16, 2006 03:47PM Report Comment

2. tyrellcorporation said...

0.1% arse.

My car tax is up 15% in one bound!

As I don't buy many printers, Champagne or 62" Plasma TVs my inflation for this year alone is running at around 40%.

Monday, October 16, 2006 04:29PM Report Comment

3. talking rot said...

I am confused. Rising oil prices did not lead to higher inflation. So why should falling oil prices lead to lower inflation. Isn't the cumlative effect of higher taxes, energy costs, food, schooling - well just about everything I need to buy except my weekly new DVD Player and Widescreen TV - leading to increased pressure on wages. Naturally people are asking for more money so they can make ends met?

What's wrong with that then - Oh it leads to higher inflation does it? Wake Up MPC.

Monday, October 16, 2006 04:32PM Report Comment

4. harold said...


"However, the Reuters poll revealed an unusually wide divergence of forecasts ranging from 2.2 to 2.6 percent",


"However, the Reuters poll revealed an unusually wide divergence in the numbers being plucked from the aether."

Space filler from Reuters.

Monday, October 16, 2006 04:47PM Report Comment

5. tyrellcorporation said...

... I have a sneaking suspicion that the price of food has climbed in recent months - simply by my own food bill. It will be interesting to see whether it's borne out by the inflation figures.

Monday, October 16, 2006 04:58PM Report Comment

6. sovietuk said...

All of these inflation figures are just a load of b***cks. Does it really mean anything discussing the diffrence between 2.x% and 2.y% as they bear no relation to reality whatsoever.

Monday, October 16, 2006 05:19PM Report Comment

7. Northernlad said...

too true soviet UK ... we are a nation fed with lies!

Monday, October 16, 2006 07:02PM Report Comment

8. bidin'matime said...

Heard a report on the Beeb today about the ageing population in China (yes, Beijing is ageing..) and the closing comment was that China is trying to get richer before it gets older - they will pretty soon catch on to the fact that they are working their socks off so we can enjoy cheap goods. Where's Uncle Tom these days - he imports from China - any news to report UT?

Monday, October 16, 2006 07:23PM Report Comment

9. magnifico said...

With all due respect, Soviet uk (like the name by the way) if the difference between 2.x and 2.y % inflation is irrelevant, so is the difference between 4.x and 4.y in interest rates?

Monday, October 16, 2006 09:19PM Report Comment

10. magnifico said...

just a little addition to my previous post, I know you are talking about the relevance (or lack of it) of the figures, but they are figures all the same.

Monday, October 16, 2006 09:23PM Report Comment

11. Notamoderator said...

ah, my champagne & kerosene bill has dropped this month, lower the rates so my shares in BAT industries will go up.

Monday, October 16, 2006 10:08PM Report Comment

12. Nohpc said...

higher oil prices didn't lead to increased inflation because the manufacturers couldn't pass the increased prices on.
Do you really think tax, road tax, schooling should be in the basket of goods? Definately not. Increased interest rates will not control the inflation of these things. You people don't realise that that interest rates should be kept as low as is safely possible which is what the MPC is doing and they are doing a rather good job in my opinion. No offence to you people but none of you are MPC bankers or in any way qualified to comment on interest rates. If you were then they could hire MPC members for 20 thou a year.

Interest rates my rise this month but I don't think they will rise again for a long time and will probably come down again. You say the MPC shouldn't worry about house prices and try to control inflation only. If there is a house price crash then there will be a recession and probably deflation so interest rates would have to be reversed quickly.

The problem here is that you lot only want interest rates to go up for one reason and that is to precipitate a house price crash so you can get on the ladder.

Another thing I don't get is you say we are ruining things for future generations. How so?? They can rent and save a lot of money in doing so according to you so what is the problem. They can save any money in another savings vehicle and buy a house later down the line should they so wish. Speaking of wishes I wish you lot would stop whinging!

Monday, October 16, 2006 10:19PM Report Comment

13. kpjcomp said...

Hi Nohpc,

I think you've come to the wrong website :)..

I'm sure you have your own opinions and think the MPC are doing a wonderfull job, good for you.
Like you say where not MPC bankers, so who are we to have an opinion anyway.
I assume you think the FED did a wonderfull job too?, because were not FED bankers either?

I'm sorry where whinging too much for you, but I'm not sure your wish is going to come true here.

Monday, October 16, 2006 10:45PM Report Comment

14. paul said...


No you are definitely wrong.

The MPC remit is not a partcularly complex one. Of course, there are complex decisions involved, but remember that they only convene once a month, and vote to reflect their full time interests. When they do convene, there are only two buttons to choose from which are blunt instruments to tackle inflation. Leaving the buttons alone is also a valid choice when the time comes once a month to do something (and still get paid 130k a year!)

I strongly suspect that MPC indecision, procrastination, conflicts of interest and incompetence for their remit has been masked by good fortune from a stock market boom followed by a housing boom and now another stock market boom, all of which have had nothing to do with careful and considered interest rate management. Now though this is changing, because what they decide to do now will have magnified effects as the UK economy has become extremely sensitive to interest rates.

Their most recent indications from the minutes are that they are not adopting a "think ahead and anticipate" tactic but a "wait and see" approach. Well, if someone on 20k adopted a "wait and see" approach to their job, they'd pretty quickly be shown the door.

This is why if inflation does go over 3% as appears very likely, the MPC members including Mervyn should actually resign.

Monday, October 16, 2006 10:59PM Report Comment

15. Nohpc said...

Inlfation is over 3 % in most developed countries at the moment. Maybe the target of 2% is too low. 2% does not seem like a lot to me and inflation cannot continue indefinately if the money supply has run out so it should drop from its current high rather than rise. I would bet money that it does not rise above 3%

Monday, October 16, 2006 11:39PM Report Comment

16. 2007 Turnaround said...

Sorry Nohpc, I have to agree with Paul

You seem also to suggest that we want an interest rate rise so it will trigger hpc. If the everything is in such good shape then house prices won't be much affected by one or two, or even three minor rate hikes... but you sound a bit worried by that prospect so I reckon that really you know the economy is fragile

Personally I can't wait for hpc and see you greedy tw@ts lose a few quid

Tuesday, October 17, 2006 12:19AM Report Comment

17. This comment has been removed as it was found to be in breach of our Blog Policies.


18. Hyrax said...

Its a little dangerous to compare ourselves to our American cousins..they have FIDC federal banking protection for savings upto $100k per person per bank, they have 401K transportable pensions,
that they can borrow against the principle of this fund to set against a mortgage and pay the principle and send that low interest back into their own fund! These mortgages can be often fixed rate for tens of years or life of the loan.
You can minimise your property taxes simply by living frugally if you wish, by not buying a new car or property, as these taxes decline with age. You also cannot go overdrawn at the bank.. and they've still got it wrong in real estate.
What makes us think UK plc can do any better?
We don't really manufacture anymore, not even a nation of shopkeepers, more a nation of estate agents (at least a dozen offices to the average small town like Hereford) and mortgage owners.
Our cumulative tax rate is approaching 51%, at least 10% greater than in the USA.
The last thing the Bank of England wants to do is touch the brakes by increasing the base rate, let alone stand on the brakes for fear of locking the wheels of UK plc. This juggernaut is rolling and the MPC are probably strapped in like stunt men waiting for the first bend, I suspect the laws of physics will take over some time soon.

Tuesday, October 17, 2006 12:20AM Report Comment

19. talking rot said...

Fellow Whingers

I would like to welcome NoHPC - it is good that there is an alternative view. I recall several good rallies between "Denzil" and "Caesium" so of which raised the intellectual rogour of this Blog; and some of which were just plain funny.

NoHPC - you are most welcome because I get to exercise my logic against you. Time will tell who laughs last - and longest. By the way, do you think manufacturers will pass on the cost reductions of lower oil prices to the consumer. Personally, I don't think so. They will, quite rightly, seek to maximise profit. Where possible, they will increase prices. So lower oil prices are unlikely to lead to lower inflation.

Alas, I can not see interest rates rising as a result of high inflation. We'll be lucky to get to 3% and will probably top out at 2.7-ish% For all the comments about the MPC on this Blog, the MPC predictions have not been far from the truth.

The cause of the HPC will, if it happens, be a combination of tightening lending criteria as a result of Banks wishing to protect themselves against bad debts, rising unemployment in the UK [non-immigrant] workforce, or a fall in the value of the against the Renminbi. Can't see these things happening for a while yet. Besides, can some tell me what constitutes a crash anyway? 50% reduction over 5 years; 5% reduction over 1 year? Who knows.

Tuesday, October 17, 2006 12:29AM Report Comment

20. talking rot said...

Sorry chaps - you can tell it is late. Late me translate my poor English:

"Caesium" so of = "Caesium" some of
intellectual rogour = intellectual rigour

A HPC crash will have occurred when, and only when, I move from a state of not being able to afford a house near a good school, to being able to afford a house near a good school. Currently I stand a better chance of growing a second hole in my bottom.

Tuesday, October 17, 2006 12:32AM Report Comment

21. george monsoon said...

Talking rot, No amount of talking the market up will make people buy houses. At present only the most stupid punter is being drawn in because you have to be really stupid to fork out 12 times your combined annual wage on an interest only mortgage, when the interest rates are as low as they will EVER get.

As for inflation, I have a pretty solid payment structure. I pay my bills each month out of a single account, to which I have added another 20% just to cover the cost increases since January. (this is basic bills such as heating, petrol, food, etc.. I have no loans, or credit cards.) I have no idea how the CPI figures are calculated, but for my world, they are not worth a F@rt. Inflation is climbing, and I need a payrise. I wonder how many other people in the country are in the same boat? Get those interest rates up to combat inflation, never mind the housing bubble. Thats popped at least a year ago!, the VI's won't admit it until they have no other choice. I bet they only admit the crash long after things have stagnated or started to pick up again. NoHPC is on a different planet to us, I suggest finding a forum that supports his argument, but for my money he has a better chance at platting water.

Tuesday, October 17, 2006 09:30AM Report Comment

22. harold said...

"No offence to you people but none of you are MPC bankers or in any way qualified to comment on interest rates." Nohpc
"Interest rates my rise this month but I don't think they will rise again for a long time and will probably come down again." Nohpc

Err... forgive me Nohpc for pointing out the bleedin' obvious, but arent you rather ignoring your own advice?

True, none of us are MPC members (well, not to my knowledge), but that's why we write blogs - a far better pass time than wrecking economies and destroying thrift through over-lax monetary policy.

Tuesday, October 17, 2006 10:09AM Report Comment

23. inbreda said...

NoHPC - I just have a couple of points to make. Surely you realise that the MPCs job is to control inflation. It is not their remit to support a housing bubble and Merv has said as much.

Admittedly, it would be crass of them to raise interest rates just to meet their target in the full knowledge that it may trigger a recession - but answer me this - if it is going to become their remit to avoid a bust, perhaps they should have put a little forethought into preventing the boom?

You can't have it both ways my friend - they could have supressed the housing market while the economy was relying on a stock boom, but they chose to stick to their "we only target inflation" remit. They cannot change their tune now.

If, as you say, higher oil prices didn't lead to increased inflation because manufacturers couldn't pass on the increase, then what makes you think they will pass on a decrease? You're effectively saying that they have been suffering losses or lower profits, and now things are easing a little, they will move to make more losses. Not a convincing argument to me.

You are right that none of us (so far as I'm aware) are MPC members or even qualified to be so. I also assume that neither are you, so I will take your "I don't think they will rise again for a long time and will probably come down again" comment with a pinch of salt. After all, it has not been developed from rounded debate as so many other opinions on this blog have been.

You are wrong in thinking that I want interest rates to rise to precipitate a house price crash. I personally would like interest rates to rise, because I have been a prudent saver and yet the value of my savings is being depleted by a government/MPC that are clearly fiddling the inflation figures and keeping interest rates artificially low.

The future generations will be stuffed because they will NEVER be able to buy a house. They will be FORCED to rent from property owners - which will keep the property owners rich and the future generations poor. Study feudal systems in the middle ages, and try to find the positive side of it.

Rant over.

Tuesday, October 17, 2006 10:20AM Report Comment

24. C'mon Correction said...

The MPC are puppets on government strings, I think everyone gives them too much credit.

Nu Labour have no economic foresight - see the debt mountain 1.3 TRILLION, UK public borrowing an extra 1 million every 5 minutes, UK public spending approx 1.30 for every 1 they earn.

It can not continue, it will not continue.

Tuesday, October 17, 2006 11:13AM Report Comment

25. Nohpc said...

If homeowners are already stretched to their financial maximum then why does an interest rate rise not reduce inflation much more than it has done? If people are so stretched already then more rises should mean they have no disposable income.

Also neither sales or prices have dropped this year so who is buying all these houses that are unaffordable? If house prices haven't risen then people can't move up the ladder so easily. I think prices will level out for 5 years or so giving first time buyers time to save up for a deposit. I would be very surprised if there is not a huge increase in London prices coming up for 2012.

If one of us is right will everybody else on the sight congratulate them and appologise for the bitter arguements?

One more thing. Turn around 2007 said he can't wait for greedy tw@t property owners to be hit by the house price crash. One day when you all own your own property you will also be glad when house prices rise if you are not planning on moving up the ladder. Personally a house price crash would not have any financial effect on me other than to wipe out my positive equity but it is nice to have that equity there as a cushion incase you want to sell up and move, travel, or just do anything else other than live in britain. I like you guys. You are an intelligent bunch but very black and white on this issue.

I'm off to bed to fall asleep and dream about gordon brown as prime minister now (joking!)

Tuesday, October 17, 2006 11:47AM Report Comment

26. Missedthegravytrain said...


I think I have been looking at this all wrong - I looked on the return to feudalism as a bad thing. How wrong I was.

I can't afford a house (well actually I can't afford a one bedroom flat - but that is by-the-by). But ultimately my folks, who have houses, will die and leave them to my sister and my good self.* Fantastic I will be part of the landed gentry. Why am I so happy about the demise of my loving parents? Well, there are way too many of us on this planet - which quite frankly is the only real problem the world faces. Suddenly we as a nation will have a really good excuse not to spawn more than one screaming brat in a pathetic attempt at self immortalisation.

We should export this modern model of serfdom. It may just save the planet.

*BTW, my folks are divorced - there is no BTL souring my blood line.

Tuesday, October 17, 2006 02:04PM Report Comment

27. rocket robbie said...

I work for the MPC, only joking! a friend from work has just brought a house in Dover with his girlfriend, neither my friend or his girlfriend earn great money but they are able to afford a 3 bed end of terrace house in a respectable area and still have enough left over to have a social life. Someone in this debate described first time buyers as mugs, but i think he is the mug because FTB like my friends can afford a repayment mortgage even if the rates go up to 5.25. If they go higher than that which do not look likely they can always re-mortgage over a longer term, as long as they are paying some money off the capital what does it matter. Also people on this site keep talking about the last crash and how people have not learned. Well perhaps they have, perhaps they realise even if prices do fall they will rise again.

Tuesday, October 17, 2006 05:42PM Report Comment

28. george monsoon said...

rocket.. how on earth are they doing that? Ok, myself and my partner earn a combined income of 38 thousand, which is not enough to get an end terrace two up two down. And for my area (Preston) its not a bad income. So who pays for the childcare or shortfall on the bills if my partner has a child? What happens when the rates rise?

just out of interest what is their income, how much deposit did they have and what price was the house?

Tuesday, October 17, 2006 06:16PM Report Comment

29. rocket robbie said...

George.. My friend earns 24k & his partner 13k. They brought the house for 119000.00 and had saved a 5 per cent deposit plus extra for furniture and doing up the house. I know that if they have a baby it will press them hard financialy but it can be done. They are both 22 years old so they have plenty of time to start a family and if a accident should happen then if i was them i would knock the payment terms of the mortgage back to 30 or 35 years.

Tuesday, October 17, 2006 07:01PM Report Comment

30. rocket robbie said...

George.. My friend earns 24k & his partner 13k. They brought the house for 119000.00 and had saved a 5 per cent deposit plus extra for furniture and doing up the house. I know that if they have a baby it will press them hard financialy but it can be done. They are both 22 years old so they have plenty of time to start a family and if a accident should happen then if i was them i would knock the payment terms of the mortgage back to 30 or 35 years.

Tuesday, October 17, 2006 07:13PM Report Comment

31. bidin'matime said...

Rocket - better tell your friend to put it away for the duration ...

Tuesday, October 17, 2006 07:44PM Report Comment

32. rocket robbie said...

ok will do

Tuesday, October 17, 2006 08:11PM Report Comment

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