Wednesday, April 13, 2011

Inflation Genie in or out of the bottle?

Artemis' Foster: Mervyn King 'losing the plot'

Artemis fixed income manager James Foster says the governor of the Bank of England needs to raise rates now to prevent inflation becoming embedded in the system. Foster, who runs the £516m Artemis Strategic Bond fund, says the MPC needs to act now by raising rates before people begin to clamour for higher wages, leading to an inflationary spiral. He says: "Mervyn King is starting to lose the plot. He is not being as aggressive as he should be on interest rates."He needs to get them back up again or inflation will become embedded in the system and will be much harder to get rid of."

Posted by jack c @ 02:39 PM (2981 views)
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17 thoughts on “Inflation Genie in or out of the bottle?

  • See also “Has King gone mad? Leaviss and Foster clash on interest rates” from today’s Citywire

    citywire.co.uk/wealth-manager/has-king-gone-mad-leaviss-and-foster-clash-on-interest-rates/a486364

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  • If you think inflation is bad now, just wait untill retailers can no longer cut their margins for fear of being priced out of a competitive market.

    This whole business has to run it’s course and Mervyn can do little about it, but pray.

    Repeat

    This whole business has to run it’s course and Mervyn can do little about it, but pray.

    Through the BOEs past inaction they have now helped in creating a paradox that cannot be solved without a destruction scene in the

    attempt to resolve it.

    Best to just keep quiet whilst you look and learn Merv. You messed up.

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  • In fairness it’s not all Kings fault other policies have brought us to this place also.

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  • king isn’t losing the plot, inflation is the plan.

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  • 2. hpwatcher,

    Don’t spoil the fun.

    Be careful what you wish for………

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  • There’s virtually no chance of IR rises before the autumn now. Yesterday’s news on inflation has been reported with unbridled joy – Vince Cable has said it proves the Bank was right to keep interest rates low, and that it’s good for the economy. As hpwatcher said, they also want inflation to be relatively high, though they would never admit it. So we can expect plenty more hand-wringing about inflation, massaging the figures, and (if inflation does become rampant) gradual IR rises through next year at most.

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  • When you take the VAT rise out of the figure inflation is 2.5%. On target as far as I’m concerned

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  • @Crunchy In fairness it’s not all Kings fault other policies have brought us to this place also.

    If you look a little further back, it really is all King’s fault. We all remember August 2005’s rate decision as a wake-up call to what the ‘independent’ MPC was up really to.

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  • The B of E plan is to debauch the currency to destroy debt and buy votes.

    Keeping prices stable doesn’t enter into it.

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  • 7. paul said…If you look a little further back, it really is all King’s fault. We all remember August 2005’s rate decision as a wake-up call to what the ‘independent’ MPC was really up to.

    ~ I agree paul, but to blame King for the inflation we are seeing now is akin to the blaming of a goalkeeper for losing the match.

    I’m not defending King, personally, I think he should have stood down long before now, instead of writing all those pathetic ‘useless’ letters.

    I think you are missing the centre forward Bender Bernanke and the rest of the International team for missing their targets and overplaying

    the ball. The idea of the BOE or King in fact, being independent is a complete nonesense, that would be impossible in the wake of the

    financial upheaval we are being ‘MADE TO BEAR.’ imho.

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  • fallingbuzzard says:

    He’s changed his tune. only end of last year he was harping on that the bank had no choice than to do more QE.

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  • Foster, who runs the £516m Artemis Strategic Bond fund, says the MPC needs to act now by raising rates before people begin to clamour for higher wages, leading to an inflationary spiral.

    ~ That just might lead to rising wage demands. No, one has to look at energy, water, oil, currencies, speculation, insurance, food and so forth to see where the movers and shakers are hiding.

    You can’t pin this one on the consumer. Good try!

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  • general congreve says:

    Shut up Artemis, let King do his good works, I like free money.

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  • Skeptical First Time Buyer says:

    @10 agreed, if inflations the plan, bullion’s the “silver bullet”

    silver at 40$/oz will it make the SLA 500?

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  • Come on guys, open a window, let some air in.

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  • 16. bellwether,

    I see you have no spin for this one.

    The idea of blog leadership is to engage your readership.

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