Sunday, March 2, 2008

Inflation threat will keep interest rates on hold

Inflation threat will keep interest rates on hold

The Bank of England won't cut interest rates on Thursday. Why? Because last week yet more compelling evidence emerged that, while UK growth remains quite strong, inflationary pressures are still rising.

Posted by randomkevlar @ 04:18 PM (539 views)
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3 thoughts on “Inflation threat will keep interest rates on hold

  • “And I’d say that both the corporate world and broader public haven’t yet fully grasped the extent to which a falling pound and rising energy prices will keep pushing inflation up.”

    …..I agree that the general public haven’t got the faintest idea what is casuing prices to go up (they will when they try to get euros for their summer vacation in Tenerife or the Costas), but the corporate world know exactly what is going on and if they are exporters/ manufacturers are hoping for a rate cut to drop the pound even further, or retailers who don’t care long term, but base everything on,,”that was the best/ worst week in living memory etc so are pleading for further cuts so that the consumer will begin to binge on cheap credit again (?), EA’s, developers, builders etc are also joining the chorus, to make mortgage borrowing cheaper, and this is the real fly in the ointment to fiscul stimulus and relaxed monetary policy – the banks aren’t listening, why are they going to drop their interest rate (except for savers) when they have a liquidity/ trust crisis and want to get the most from their capital. The BoE, Fed and ECB can drop their rates as much as they like (I hope they are more intelligent than that though) to please all the VI parties, but all that will do, as has been pointed out on this site on many occassions, will be to stoke the fires of inflation through imported goods, commodities etc. Nearly all MP’s have vested interests to keep the housing bubble going, so this is going to be a long drawn out affair, with many voices, of the apparently community concerned bringing countless private members bills to bolster the ‘local’, read housing, concerns to the House. Lets not forget that all MP’s, from whatever party will have been supping from the cup of plenty and will not want that cup to empty.

    The BoE should look to hold their current position, until the ECB follows suit (as it is against the Euro that sterling has dropped the most), for to devalue the pound further will cause inflation which will be very difficult to control

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  • Randomkevlar says:

    Will common sense prevail and the BoE hold steady in March?

    What’s best for our economy, we will end up fighting or fanning inflation?

    Is hyper inflation the only way out?

    Can Mr Darling remember where Gordon put the big red briefcase?

    All these & other questions will be answered in next weeks episode of……….the labour party

    Does anyone else feel like your living in TV la la land at the moment….mmmmm maybe I’ve finally lost it…oh no there it is

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  • stillthinking says:

    Labour will ignore inflation as long as they possibly can. I consider this a certainty. What they will do when inflation becomes so obvious I have only my own ideas, which are that they will attempt to moderate with half measures, inflation will go up and up, possibly Labour won’t be in power anymore, and eventually at the last minute rates will go to new highs.
    Basically I think that any problem will be delayed and delayed until really the situation is so dire we have a choice about saving the national currency or not. I don’t believe that the UK economy is strong, about half of the UK work force are public employees and the number of public sector companies dependant on government contracts is enormous.
    As I have pointed out before, although personally I am poor, now things are in my own social circle, which I consider to be a bad sign. Only two admittedly, two people who sold their houses and stopped working. Why would they? Two people gone from the labour pool spending paper.
    Therefore, QED, inflation goes to the roof.

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