Monday, September 3, 2007
Pro-Labour rag pushes for IR cuts!
Rates squeeze consumers
The conclusion must be that, at 5.75%, interest rates are already too high for consumer price inflation. They may not be high enough to have a major effect on company spending or GDP growth or even the money supply, but even before the full effect of the existing rate hikes has been felt, they have done enough to rein in the consumer and get inflation back below target.
Posted by tyrellcorporation @ 01:59 PM (1005 views)
9 thoughts on “Pro-Labour rag pushes for IR cuts!”
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cyril says:
I suppose as personal debt goes up, the economy becomes more and more sensitive to interest rate changes. But it doesn’t seem to have dented peoples’ enthusiasm for taking on more debt. Is this what they mean by the underlying strength in the economy?
whiteknight says:
will they be pushing for a raise when GBP goes down the toilet and all our import costs go up by 50% overnight?
Symo says:
Raise it! Bloody lightweights.
planning4acrash says:
People will start to blame the MPC. That’s fine. The MPC will know that earlier drops in rates are really to blame and will be dealt a good lesson. But it is interesting now, because the Doves will be in fight mode, wonder if Branch-flower-power (David Blanchflower) will call for a cut?
Ihopeitgoeswithabang says:
Those CPI figures are fairly meanlingless over 2 months or so.
What it shows is that the rates are at a correct medium term rate doesn’t it? If the target is 2pc getting a figure of 1.9 is hardly worth writing home about is it?
There is no case for a rate reduction thats for sure. The current rate of 5.75 is causing huge problems for alot of people.
But to be honest even if the rate went down to 5.00pc they would still be in the S*** house.
crash bandicoot says:
If you follow the trend down we will be at 0% CPI by Christmas. Lies, Damn Lies and statistics.
deepak says:
What a joke, the interest rate hike is yet to hit people. 2 million policies are in for renewal within the next year.
The reason why UK HPI is positive is because introductory rates/ initial fixed rates are still in motion.
Interesting statistics will come when they come for renewal. Also with the credit crisis, the cost of renewal will be not 6-7% based on 5.75% bank rate.
It will be 8-10% based on your credit rating.
Even if the BOE reduces the rate, hoousing loan aka mortgage will still be around 7-9% nothing less. Lets see how many people can afford that.
esp BTL whose return is only 5%.
Jj says:
Don’t forget that the banks are not obliged to follow the BOE base rate. They can set their own rates to whatever they wish. If the BOE lower , the banks may not follow suit !!!
Bloo Loo says:
Thats right Deepak- The interest rates the mortgagees will pay wont be BoE rate+.25% anymore. Investors will need a return on their money plus they will see a falling value in the security offered (house) so add the 2 together and you could be looking at base+4%, which is what it used to be I beleive