Friday, January 4, 2008

Looks like the ECB can’t cut rates

Eurozone inflation remains high

Record oil prices and continuing high food costs kept eurozone inflation at 3.1% in December, the European Central Bank (ECB) has said.

Posted by holding out @ 01:49 PM (1072 views)
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12 thoughts on “Looks like the ECB can’t cut rates

  • I would not be surprised if the UK CPI came back at 1.9% – Sssssuch a farrrrrrceee

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  • It’ll be reported that inflationary rises in petrol, rail travel and food were offset by sharp declines in the price of disposable biros, pet insurance and liquorice.

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  • C'mon Correction says:

    At the bottom of the article it mentions that Malta and a place called “Cyrus” has adopted the Euro? The Eurozone is getting too big if you ask me, even places I’ve never heard of before are adopting the currency !!

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  • Actually the Dutch banks have started to raise mortgage rates independently of a base rise. For one bank there has been 2 small increases in the past month

    I think that this shows the future and eventual direction – up.

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  • To Paul;
    How can they report the offset? The pound is losing ground against the Dollar and the Euro.
    Things we Import are more costly.
    I have noticed a significant rise in my shopping basket from Tesco’s.

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  • Strange, Our currency is crumbling while the Euro is getting stronger but our inflation is going down but Euro inflation is going up. Seeing as though we have a poorer balance of trade as well isn’t this proof that there is just a bunch of liars running the country.

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  • I bet Gordon Brown wishes he’s gone to the polls straight after the conference and before the credit crunch became mainstream news.

    Now we’re going to get phoney inflation statistics and artificially low BoE rates up to the next election in the hope that the Labour voting population don’t realise how much their standard of living is slipping.

    I can’t see what else he can do as a politician. If he actually cared about the county he should start dealing with inflation rather than pretending it’s not happening. He might get some credibility for being seen to make unpopular decisions.

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  • @sovietuk: UK inflation is growing, but unlike Eurozone, we have 75% odd homeownership and thus a huge issue of property market dependency that is not in Eurozone. So they can get on with battling inflation (by not reducing IR) whereas in the UK, we let ourselves be guided by the woes of the property market. We ought to be raising interest rates to stop inflation getting worse. It would sort that as well as the currency and balance of payments. But our precious nation of BTLers and heavily indebted homeowners high on the rush of equity withdrawal to feed the “have it” mentality must be looked after first.

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  • Moley20 the comment wasn’t meant to be taken seriously. It was an affirmation that the BoE uses phony inflation statistics to paint an unrealistic picture.

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  • @growler – some European countries are similar to the UK in terms of being over-mortgaged (e.g. Netherlands). The Euro problem is that the same interest rate is applied over countries in different economic conditions.

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  • True – Netherlands (11million inhabs) are also overmortgaged. But the point is that in Eurozone, the housing market is not a big issue to influence Interest Rate policy as a fall in the market has almost no impact. In the UK, we are so interlinked with it, we cannot get on with managing interest rates without upsetting a lot of voters

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  • European_bear says:

    Any interest rate decisions are by the ECB.Germany has cheap property and low mortgages and is the biggest economy so will have the most influence. Overmortgaged countries like Holland, Spain and Ireland are just peripheral players. In any case the government in Dublin, Amsterdam or Madrid can put the blame on the ECB. Gordan Brown can pass the buck onto no one…

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