Wednesday, May 2, 2007

UK interest rates to rise by ½% next week

UK rate rise now enters the reckoning

The possibility of the first 0.5pc rise in British interest rates in 12 years grew after surveys yesterday showed rapid growth in retail sales, and manufacturers raising prices at a near record pace, last month.

Posted by royston @ 01:25 PM (699 views)
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17 thoughts on “UK interest rates to rise by ½% next week

  • dohousescrashinthewoods says:

    If Merv has the nuts to crack a 0.5% rise, I might have to admit he hasn’t been entirely neutered by political interests.

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  • The whole monetary policy saga is really quite pathetic. Tinkering with a 0.25% rise or a 0.5% rise will undoubtedly make a big difference to many people but the reactionary nature of the rises says volumes about the way economic policy is determined. It makes me cringe. The whole sorry tale of the “independent” MPC is just a massive embarrassment.

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  • tis gonna be a bad week for Blair next week – who will be handing in his notice, or perhaps giving up his job.

    what are the odds, one is going to happen to bury the news of the other?

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  • Face it the BoE & the government have very little control of our economy that’s in the hands of global speculators now, they can play around with interest rates as much as they want just as Nero fiddled while Rome burned this whole rate setting farce is about politics and public perception and nothing else.

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  • Delboypass says:

    It is amazing so much can happen in a month that we would need to raise it by 0.5% but yet have the audacity to say by end of year inflation will have calmed.

    My pay review hav used these statements saying we arent get paid as much because inflation will have decreased by end of year…

    Total bulls

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  • mrmickey,

    The rates do affect those who are intending to buy or have bought in the last 5 years. I guess you mean that the rise of rates will not have their intended affect on some things because of the world’s events.

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  • talking rot says:

    If the BoE raises interest rates by 0.5% this month or any month this year, I’ll eat my hat, followed by my computer. There are 2 reasons why we MAY get an interest rate rise of 0.25% this month. Firstly, Gordon Brown has not yet left the Treasury. Secondly, the BoE has an inflation target of 2% (with 1% either way) but no one said inflation MUST remain in the target zone. If it moves out of the target zone then so what; the Gov’n has to write an open letter to Gordie. Hey Big Deal. As long as THE PROJECTIONS for inflation are within the target zone, then the BoE is meeting its remit.

    Ask not where inflation is now. Ask where the BoE projects inflation will be in 2 years!

    Funny old thing, by the BoE’s models, it will always be in the target zone.

    So don’t get your hopes up – this is not IT.

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  • talking rot is right. This is not yet IT but IT will happen. The UK is not making new industry, we are declining, there is only so much number-fiddling that you can do.

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  • Rot said:
    >>If the BoE raises interest rates by 0.5% this month or any month this year, I’ll eat my hat, followed by my computer

    Rot, please make sure you put the video on youtube.

    Seriously though it will be .25% as a .5 increase will make the MPC look like muppets.

    As for Blanchflower you can bet he will vote for a cut.

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  • Whiteknight says:

    Yes. Great Comments. The Bank Of England has abdicated its duty thus far…. no reason to suspect that:

    a) Arrogant people who arent as smart as they think – will put their hand up and change their view.

    b) People who are there for political reasons will do what is in the long term interests of our country.

    c) Any of the MPC committee will demonstrate signs of having a functioning cerebral cortex (if they are not part of b)

    d) Economists will understand anything but linear functions and look at the history books (if they are not part of b)

    e) The MPC will realise that nobody significant believes they have any credibility to lose anymore.

    f) The MPC will realise that nobody significant believes their 0.25% rate shifts are anything but a laughable waste of time.

    etc. etc.

    Of course i am an ever hopeful person , and so i write this in hope that these people will wake up and smell the caffine. To be honest there might be some karma at play here;

    Gordon is so blinded by power and an attempt at the top job, he doesnt realise that Tony and his cronies have figured out this is likely to be the worst and most embarassing period for a leader for many a year. But he isn’t smart enough to pass the poisoned chalice is he?

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  • It will be 0.25 percent as the reports of 0.5% are spin to make the plebs feel better when it ‘s only 0.25%.

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  • Unfortunately, while I think Mervyn and the deputy governors would be keen on ½% in order to restore the MPC’s credibility, I think Gordon’s direct appointees to the committee will put the kibosh on this. Isn’t odd how all of Gordon’s MPC appointees are experts in areas of economics other than money, finance and banking? Blanchflower is a labour economist. Sentance is a transport economist. Besley is an econometrician. Kate Barker is a business economist. Of all the economists in this country that specialise in monetary economics and banking, both in academia and outside, Gordon Brown has not selected a single one to participate in the most important monetary economics job in the country. Doesn’t that say something?

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  • Talking Rot is spot on – even Merv wouldn’t come out with the statement he made a couple of weeks ago about medium term inflation pressures receding if he thought there was a remote possibility of a 0.5% rates hike next week. In fact this is possibly one of the better opportunities punters have to bet against the crowd and go short sterling.

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  • Whiteknight says:

    What is the process for sacking some of them then? Does anybody know? Is it possible? Motion of no confidence? Or is it entirely between Gordon and Swervin’

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  • The monied class does not like the look of Gordo as a Prime Minister hence the bad publicity he’s been getting as of late. Cameron is the monies new boy after all he is related to William IV so a bit of interest rate rising should turn public opinion agaist Gordo and pave the way for our new Prime Minister Mr Cameron.

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  • 50 basis points!

    Bring it.

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  • dohousescrashinthewoods says:

    on.

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