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Up, up and away

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    Up, up and away

    http://news.bbc.co.uk/1/hi/business/6562723.stm

    I think we will be at 6% interest rates by the end of the year.

    First Law of Contracting: Only the strong survive

    #2
    Interest rates are only useful as a weapon if the inflationary pressures are pay related.

    If:
    monopolistic companies are allowed above inflation increase
    you hike taxes on essential goods
    you allow local government to inpose above inflationary council tax rises

    then suprise suprise... inflation will go up!

    I just can't see how hiking the interest rate helps at all

    Please enlighten me
    How fortunate for governments that the people they administer don't think

    Comment


      #3
      Originally posted by Troll
      Interest rates are only useful as a weapon if the inflationary pressures are pay related.

      If:
      monopolistic companies are allowed above inflation increase
      you hike taxes on essential goods
      you allow local government to inpose above inflationary council tax rises

      then suprise suprise... inflation will go up!

      I just can't see how hiking the interest rate helps at all

      Please enlighten me
      Because the main reason for inflation (hidden inflation) is house price increases. Put interest rates up to 8%, that should cure the problem.
      Last edited by Numptycorner; 17 April 2007, 09:50.
      I remember the good old days of this site when people used to moan about serious contractor related issues like house prices and immigration. How times have changed!?

      Comment


        #4
        Don't worry the bank of england are writing a letter to the government to explain it all. Supposedly being released at 10.30am. Better get the pop-corn out it might be good. Unlikely though, just more bs.
        "If it floats, flies, or f***s, lease it." - Evel Knievel when he wasn't jumping buses or women

        Comment


          #5
          Originally posted by Troll
          Interest rates are only useful as a weapon if the inflationary pressures are pay related.

          If:
          monopolistic companies are allowed above inflation increase
          you hike taxes on essential goods
          you allow local government to inpose above inflationary council tax rises

          then suprise suprise... inflation will go up!

          I just can't see how hiking the interest rate helps at all

          Please enlighten me
          It is not just wage increases that increase spending. People are borrowing to spend, like never before. Interest rate rises should slow this down.

          Comment


            #6
            I heard that people aren't just borrowing to spend, they're borrowing to pay off their debts !

            Milan.

            Comment


              #7
              Originally posted by wendigo100
              It is not just wage increases that increase spending. People are borrowing to spend, like never before. Interest rate rises should slow this down.
              And a lot of people are feeling wealthy because of all the equity they have in their properties. I don't think small interest rate rises are going to make a difference. So many people believe the values of their property is 100% safe, they won't be scared by a small rate rise. It'll take a house price dip to do that.

              Is there a good economic reason for not including house prices in inflation calculations? If you did, what'd be the true inflation value? 10-15%?
              Will work inside IR35. Or for food.

              Comment


                #8
                The largest upward effect on the CPI annual rate came from food and
                non-alcoholic beverages.
                Shop-bought milk prices increased by over
                2 per cent in March, compared with a fall of around 8 per cent last
                year when widespread reductions were led by supermarket chains.

                Small upward effects came from bread and cereals and meat, where
                prices rose in March but fell a year ago. A partially offsetting
                downward contribution came from fruit, as prices fell by more than a
                year ago.

                Further large upward effects came from:
                • Furniture, household equipment and routine maintenance,
                where prices for furniture and furnishings rose by more than a
                year ago, showing a record monthly increase of nearly 10 per
                cent in March, in the lead up to Easter special offers. There
                was also a large upward effect from major household
                appliances, where prices rose in March but fell a year ago;
                • Recreation and culture, where upward contributions came from
                games, toys and hobbies, with prices for computer games
                increasing this year but falling a year ago, and cultural services,
                where admission prices for theatres and live music events rose
                in March but fell last year; and

                • Transport, where petrol prices rose by nearly 2.5 pence per litre
                in March compared with little change a year ago. Partially
                offsetting small downward effects came from air and sea fares,
                both of which fell in March.

                Small upward contributions came from clothing and footwear and
                restaurants and hotels, where prices in March rose by more than a
                year ago.

                A large downward effect on the CPI annual rate came from housing
                and household services, mainly due to gas and, to a lesser extent,
                electricity. Some new reductions in gas tariffs recorded in March
                offset the continued phasing in of increases in others, leading gas
                prices to fall over the month. In March 2006, tariffs for both gas and
                electricity rose by around 3 per cent.
                How fortunate for governments that the people they administer don't think

                Comment

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