Wednesday, March 9, 2011

An argument for a gently stagnating property market

Interest rate will not save investors, says Neptune

Neptune Investment Management argue that we will not see any big interest rate rise in the forseeable future: "the Bank has little incentive to embark on a series of rate rises, as inflation is unlikely to be alleviated by lifting the interest rate from its current record low of 0.5%. Increasing global commodity prices, caused by the rapid expansion of emerging economies, is largely driving the current round of inflation, according to Dowey. Interest rate increases are only effective against broad-based inflation, which stems from rising wages, he explains." So although modest IR rises stressing indebted households seem plausible, the MPC may not 'get serious' about interest rates anytime soon.

Posted by quiet guy @ 11:28 PM (1397 views)
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3 thoughts on “An argument for a gently stagnating property market

  • “Interest rate will not save investors, says Neptune”

    Inflation will not also, whichever way one looks at it, property prices will not follow.

    The inflators must have their way above all else. And you thought they cared.

    Strange that they can control naked short selling but not naked buying.

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  • Thanks QG,
    It’s good to get another perspective on interest rates.

    Now that Spain’s debt has been downgraded again there are bound to be continued worries about sovereign bond repayment. In a linked article, Pimco says it is moving away from US municipal debt.

    Any idea what sort of medium term sectors would be good to invest in when I trigger my “draw down” pension? And what to avoid?

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  • @Alan

    “Any idea what sort of medium term sectors would be good to invest in when I trigger my “draw down” pension? And what to avoid?”

    I’m out way of my depth trying to answer questions like that. personally, I’m in PMs and cash at the moment and have some vague ideas about buying energy sector stocks that pay reasonable dividends for holding long term. Some sources, including posters on here, seem to think that there will be big new developments in energy production in the near future so identifying the right energy technologies will be tricky.

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