Tuesday, April 24, 2007

7.5 percent would put the cat amongst the pigeons

Interest rates could reach 7.5pc

A group of Britain's leading monetarists have launched a harsh attack on the Bank of England's Monetary Policy Committee, warning that inflation risks surging out of control in repeat of earlier boom-bust cycles.

Posted by uncle chris @ 07:16 AM (674 views)
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20 thoughts on “7.5 percent would put the cat amongst the pigeons

  • Houseoflords says:

    Ah, that’s OK – they were 15 % 20 years ago. Should be fine until they get that high.

    Ho ho ho ho! If you haven’t got a fixed rate, best get out now while you still can!

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  • Whiteknight says:

    Keep going. You’re heading in the right direction.

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  • If the press was saying that rates would not go over 5.25% a few months back — Now there is a possibility of 7.5%…. I’m waiting for the press to start saying that rates of the 80’s will be back in the next couple of years, expect to see 15% again. The next few years are going to be interesting – I think a punt on a .5% increase next month would be worthwhile, I wander what the odds are?

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  • dohousescrashinthewoods says:

    Nil. The BoE haven’t the [email protected]
    They are protecting the economy and are afraid of upsetting Mr Bubble.

    Now it’s too late, inflation is on them, but if rates go up, houses go down and consumers won’t be happy. Consumers will turn on the government and the government will turn on the bank and Mervyn gets done in either way.

    Moral of the story?
    No one accepts responsibility any more and everyone wants it to be someone else’s fault.
    Maybe that’s what be should change – personal responsibility.

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  • dohousescrashinthewoods says:

    I seem to rewewber last jear the mmeja were saying peak at 5%?

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  • Well M’Lord it was like this you see, me and a gang of other birds went to one of these property investment seminars, caus everyone knows pensions are crap.

    Well it was the trill of it all, I only wanted to buy one and then, well I just got carried away, well property only ever goes up in value don’t it.

    You see this big bird who was on the stage said, if we get one of these sub-prime mortgages on a fixed rate, then the rent will nearly pay for the mortgage.

    Well you see I just didn’t know this fixed rate would end, and you see it was only 5% then and well !!!!!!!!!

    Well of course I realised it was bad, but you see so did the others birds, well we just all tried to fly through the exit of the loft together.

    Only two broken wings, but you see I couldn’t work then and then there’s the bills.

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  • Well M’Lord it was like this you see, me and a gang of other birds went to one of these property investment seminars, caus everyone knows pensions are crap.

    Well it was the trill of it all, I only wanted to buy one and then, well I just got carried away, well property only ever goes up in value don’t it.

    You see this big bird who was on the stage said, if we get one of these sub-prime mortgages on a fixed rate, then the rent will nearly pay for the mortgage.

    Well you see I just didn’t know this fixed rate would end, and you see it was only 5% then and well !!!!!!!!!

    Well of course I realised it was bad, but you see so did the others birds, well we just all tried to fly through the exit of the loft together.

    Only two broken wings, but you see I couldn’t work then and then there’s the bills.

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  • There was a local news item recently where a family chucked the house keys back at the mortgage company and delivered themselves up to the council wanting a council house. The council said they’d made themselves homeless and therefore were not eligible for a council house, their argument was they didn’t understand what they were getting themselves in to and they’d lied about the husbands salary on the mortgage application said he was on £30,000 actual salary £14,000 now they couldn’t afford the payments. I expect a flood of these stories in the future, where all these people are going to live now the council house stock has been sold off is anybody’s guess.

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  • I know somewhere in London that lets you live there rent free. Self contained, 1 bedroom, free elec/gas/tv, warden patrolled area, very close to the central tube line. Unfortunately, it is in Wormwood Scrubs.

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  • I believe the mechanism by which Gordon Brown is controlling the interest rate has been exposed in this article – appointees like Blanchflower are Brown’s glove puppets – and are cuckoos in the nest of an “independent” Bank of England. This makes sense in that Mervyn King was a highly regarded academic economist at the LSE prior to joining the BofE. Indeed, the fact that this article is written by a cadre of his former colleagues both at the LSE and BofE will make it very difficult for him to ignore or dismiss in academic and central banking circles. I expect more media coverage in the future of a split in the MPC as King and the serious economists try to distance themselves from the lunatic zealots that are only trying to make their master (Gordon Brown) look good by prolonging the boom.

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  • p. o. o. r , the odds are pretty sh1t on betfair (1.13 for +.25, 12 for +.50, hold 18.5), they were great until the last inflation data came out, i had over 100 to 1 for this month and good figures on +.25, but the data was late :_(

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  • Very interesting indeed. This is a major warning from highly respected economists. If there is no way out of this – as they indicate – then we really could be at the beginning of the end. After years of expectation, the downturn is on the cards. Rates of 6.5% might not be high enough to cause a crash, but 7.5% must be, right?

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  • Where were these people a year ago? Where were they in 2005 when rates were cut? Everyone’s an expert after the fact, seemingly even the so-called ‘experts’. Although it is good that the MPC are now getting the attention they deserve. Let’s see graphs of inflation vs the MPC members’ voting.

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  • People should be worried – if they have recently borrowed – with the amount they will have borrowed (as compared to the past) – any IR rises would be more like hitting IRs of near 20%.

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  • Expect to see the ‘establishment’ dip more stories like this out into the main-stream media, so as to prepare the public for the ensuing shock. Poor, you’re right about constant upward revisions from now on. Expect Merv to step aside in the next 6 months.

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  • I have just looked up the MPC appointment process. Of the 9 members, Brown appoints 4 on his own. He has the final say over the appointments of another 2. Only 3 “career central bankers” could be even remotely considered “independent”.

    In case anyone is interested:
    http://www.parliament.the-stationery-office.co.uk/pa/ld199899/ldselect/ldmon/34/1021306.htm

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  • …and in law Brown can over-ride the MPC’s decision at any time. If I had been the BoE, I would have rejected the scam of ‘independence’ that was perpetrated in my name.

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  • If money supply growth is currently as high as 12.8%, then I foresee RPI inflation exceeding 10% in the next couple of years. Personally, I don’t believe the B of E will have the courage to increase interest rates significantly now to avoid it.

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  • tyrellcorporation says:

    I just don’t see rates climbing that high. rather than taking decisive action to curb inflation I think they will merely take decisive action to massage the figures! They need inflation in the system to erode debtors debt and keep everyone spending.

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  • Van Hoogstraten says:

    Agree with Tyrell, management of the figures is the game these days. The BoE will suppress the true inflation figure as it keeps climbing, and hope nobody notices

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