Thursday, Nov 30, 2006

OECD doesn't think IR rise necessary in UK

The Scotsman: Think-tank rejects case for raising interest rates

In its biannual assessment of the UK, the Organisation for Economic Cooperation & Development (OECD) said a raft of migrant workers from the likes of Eastern Europe was helping keep wage inflation under control.

Posted by jellycaster @ 06:13 PM (465 views)
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10 Comments

1. harold said...

OECD doesn't think IR rise necessary in UK

Oh gosh, shock, horror! Thanks JC for the VI clap-trap, most amusing.

Thursday, November 30, 2006 07:33PM Report Comment
 

2. paul said...

The OECD also said that the chances of a house price crash were 5% less than a year ago.

That view is no longer shared by the UK media or any respectable economist.

Thursday, November 30, 2006 07:53PM Report Comment
 

3. Nohpc said...

Paul dont' talk rubbish. What you meant to say is that view is no longer shared by you. Lots of respectable economists share that idea (see capitol economics predictions + I am sure others to come). Keep on wasting your savings in an ICEsave account!

Thursday, November 30, 2006 09:45PM Report Comment
 

4. nearly30 said...

Yes - was equally confused when I read Rachel Lomax's Perspectives on Current Monetary Policy from BoE website - not one line in a 13 page document about house prices influencing the economy. Or if there was it was very small print.

Some choice cuts:

"changes in interest rates take a year or two to have their effect. The current rate of inflation
says rather little about where inflation is likely to go. We need to judge, as best we can, the
changing balance of supply and demand in the economy – inflationary pressure".

Sorry? So why did BoE use housing a one of the main reasons for raising IR in Nov if IR have no immediate effect?

So the runaway train has gone past through the last stop sign then?

Thursday, November 30, 2006 10:01PM Report Comment
 

5. monty said...

Thank you for the article JC. It's always interesting to see a big gun like the OECD with that point of view. I shall look for the report.

Nearly30, I think the reason for your confusion is the conclusion that "BoE use housing a one of the main reasons for raising IR in Nov." I've read the MPC report and cannot find anything that would back that up. Under their "immediate policy decision" section they mention that "house prices had climbed further" in relation to "nominal demand". This I would call mentioned in passing rather than a main reason.

The MPC's remit is to keep CPI between 1% and 3%. As house prices are not part of the CPI I fail to see how the BoE is able to use HPI as a "main reason" for raising or lowering rates. A consideration, certainly, but not an overriding factor.

Friday, December 1, 2006 10:38AM Report Comment
 

6. jellycaster said...

harold, can't help but notice that whenever anything is posted that says an IR rise is unlikely or unnecessary, you say the post is a waste of time or the source is unreliable. Just because something conflicts with your opinion doesn't mean it isn't worth reading. The OECD is a fairly heavyweight organisation, which of course doesn't make them right, but it does mean that you shouldn't disregard their opinions on the basis that they don't accord with yours.

Friday, December 1, 2006 12:52PM Report Comment
 

7. Boarder said...

Wage inflation is GOOD NEWS. "Modern" economics is completely backwards.

Friday, December 1, 2006 01:13PM Report Comment
 

8. paul said...

nohpc, what I meant to say is that that view is no longer shared by the FSA, David Miles, Chief Economist at Morgan Stanley and Swervin Mervyn King himself among others.

But you and David "Turnip" Smith know much better than that lot of losers, don't you?

Friday, December 1, 2006 04:44PM Report Comment
 

9. harold said...

jellycaster

Don't be silly, I'm happy to listen to people whom I consider to have superior knowledge and experience, and (this is the important bit) who are balanced and impartial. It's just that IMHO anyone with 2 economic brain cells to rub together know that IRs are going to rise - I won't rehearse the arguments again here. How the OECD "a fairly heavyweight organisation" come to the view that IRs are not going to rise is, well, faintly amusing.

Friday, December 1, 2006 06:11PM Report Comment
 

10. Nohpc said...

Paul, you act as if there is a right answer here when there clearly isn't. As stated before I am willing to accept both possibilities whereas you just have a blinkered view and only hear what you want to hear. If David Miles turned around tomorrow and said actually there will be more boom you would call him a VI and ignore him.

Saturday, December 2, 2006 12:56AM Report Comment
 

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