Inflation and Interest Rates

[Mick Mac]

With inflation above target what next for interest rates.?

[HAL9000]

Expert analyses of several recently slaughtered chickens? entrails suggest they are going up.

[Narnia]

They wont be going down.

[TheArtfulDogger]

Narnia Wrote:

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> They wont be going down.

fnrr fnrr

[Mick Mac]

Don't understand the logic really. Prices are rising but its not due to consumer confidence. Far from it. Surely any interest rise will hit people hard. But the mortgage companies have already begun pulling fixed deals in anticipation of a rate rise.

[Loz]

That's the problem MM. A lot of it is being caused by the weakness of the pound, world food costs and energy prices, rather the economy bubbling over. I think a rise is unlikely.

[Mick Mac]

Yes - there seems to be a disparity between the Bank of England Monetary Committe voting which I think was unanimous in favour of no rate rise in Jan and the mortgage market which is factoring in a rise soon.

[nashoi]

If you believe your currency is undervalued though the easiest way to correct it is with rising interest rates

[huncamunca]

Rates are going up innit.

lots of cash slopping about & is all going elsewhere

The Carry trade is killing the western currencies and by default driving up commodities.Not that there is actually any more real demand for commodities, but with the purposeful pegging of the Yuan & manipulation of chinese interest rates, it not hard to see why.

Inflation per se isnt the worry here, the assumption that high inflation is always bad, is not correct but it is a headline grabber and the Government BoE understand that .

innit

[karter]

Well sounding like Martin Lewis here but if you have debt pay it off quicker whilst interest rates are so low.

[Mick Mac]

Interest rates day today. Personally I am hoping they "hold".

[woofmarkthedog]

I have that " Bond" feeling, you know the one?

007 is tied to a saw bench, blades whirring & instead of 007 it's us tied to the friggin thing.

And if I hear " it's the mess we've inherited " one more time I'll screeeeeeeaaaaam my head off ( again )

[karter]

Interesting this thread hey Woof. Welcome back. ;-)

Money is still cheap to borrow.

[Mick Mac]

karter Wrote:

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> Well sounding like Martin Lewis here but if you

> have debt pay it off quicker whilst interest rates

> are so low.

But maybe not if money is cheap as someone just pointed out.

[HAL9000]

The trick is to fill ones boots when one can get a greater return or pay off loans if one can't - I guess.

[Annette Curtain]

karter Wrote:

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> Interesting this thread hey Woof. Welcome back.

> ;-)

>

> Money is still cheap to borrow.

Silly dog, he's back where he belongs.

* kicks cage *

Nette.:-$

[fyvum]

Don't understand the logic really. Prices are rising but its not due to consumer confidence. wrote Mick Mack.

It is not difficult if you remember 'quantative easement' Mick, devaluing by any other name, flooding water marked printed paper, in place of money.

[Mick Mac]

and your point is......

[Huguenot]

Loz: "A lot of it is being caused by the weakness of the pound, world food costs and energy prices, rather the economy bubbling over. I think a rise is unlikely."

I think that's spot on, however a raise in interest rates would strengthen the pound and reduce food and energy costs as a proportion of individual income, helping out the 'renting' (as opposed to mortgaged) classes.

Except, it would make exports more expensive to foreign markets, reducing demands on British industry, leading to job cuts that would disproportionately hurt the low skilled 'renting' classes.

etc. etc.

Not easy to govern financial policy...

[fyvum]

and your point is......wrote Mick Mack

Well if you flood lots of paper on the market and call it money for quantative easement,

it devalues the original money by that percentage.

Does that make it any clearer?

[Mick Mac]

Double post whoops

[Mick Mac]

Are you just making random statements or are you going to demonstrate the relevance of your points to the interest rates discussion for us?

[nashoi]

Sorry, but are you being deliberately obtuse Mick Mac? Attempting to restrict the money supply in order to control inflation was the basis of Tory economic policy in the early 80's, called the MTFS it failed and manipulating interest rates eventually became the main method used.