Interest rates will rise for the next decade
16 October 2003, 10:43 AM
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http://news.bbc.co.uk/1/hi/programme...ch/1747371.stm
Economists have also warned that Gordon Brown will need to raid household incomes with further tax rises if NL win the next election. Inflation-busting council tax rises are also likely to rise over the next 2 years.
All this while NL blames credit card companies for pushing cheap loans, I know who I balme for my lack of spending power/cash and it aint credit card companies
16 October 2003, 10:47 AM
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That's a bit out of date, isn't it? The story is dated January 7th, 2002. The base rate is now 3.5%, i.e. lower than that story predicts. Ah well... *even* journos can get it wrong sometimes! 
16 October 2003, 10:49 AM
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A decade is a nuts timeframe to predict. But i'll stick my neck out slightly and say we get a 25bp hike either in November or December, and a further 75bp by the end of next year.
16 October 2003, 10:52 AM
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Sorry I didnt check the date on the story, a work mate gave me the link. This was front page news in some of todays papers though. I know they have said all this before but supposidly the indications for a rise are the strongest yet.
I guess intrest rates are like the weather, you expect hail and get a heatwave
I guess intrest rates are like the weather, you expect hail and get a heatwave
16 October 2003, 11:02 AM
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The only way is up!
i see no practical reason why they need to go up any time soon. in fact, if we go to a common currency, they will likely have to fall.
16 October 2003, 11:06 AM
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Inflation, milo. Trying to keep one step ahead of it.
And it's quite likely Eurozone rates will increase soon too. And anyone who thinks US rates at 1% is sustainable for much longer is deluding themselves in my opinion.
And it's quite likely Eurozone rates will increase soon too. And anyone who thinks US rates at 1% is sustainable for much longer is deluding themselves in my opinion.
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16 October 2003, 11:54 AM
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I would agree that credit card companies offering 0% and low rate loans have a lot to answer for. People spending a lot of cash they dont really have doesnt help matters. Then again the relevant authorities should be keeping them all in check.
Simon.
Simon.
16 October 2003, 02:41 PM
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But we have very high credit card debt at the moment.
Isn't the, er, Credit Card Ombudsman trying to do something about this at the moment?
Useless info:
Ombudsman is the only Swedish word who will find an English dictionary.
Isn't the, er, Credit Card Ombudsman trying to do something about this at the moment?
Useless info:
Ombudsman is the only Swedish word who will find an English dictionary.
16 October 2003, 03:39 PM
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raising the interest rate to stay ahead of inflation.. that would just result in an upward spiral.
if it wasn't for the govt increasing rates (council tax & national insurance in particular) way above inflation (which will cause people to demand higher salaries and hence higher inflation), we could sustain a low interest rate (and of course inflation), keep spending high, and know that any short-term debt people run up is more than offset by equity in their homes (assuming they've owned their home for more than a few years of course).
the real problem we face is what is the state going to do when all of the people from the babyboom generation retire? how on earth is the state supposed to support them? on the plus side there, unemployment will be a near non-issue tho.
if it wasn't for the govt increasing rates (council tax & national insurance in particular) way above inflation (which will cause people to demand higher salaries and hence higher inflation), we could sustain a low interest rate (and of course inflation), keep spending high, and know that any short-term debt people run up is more than offset by equity in their homes (assuming they've owned their home for more than a few years of course).
the real problem we face is what is the state going to do when all of the people from the babyboom generation retire? how on earth is the state supposed to support them? on the plus side there, unemployment will be a near non-issue tho.
16 October 2003, 03:47 PM
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Thing is milo, you're kind of assuming inflation is a bad thing. Generally, in moderation, it isn't. The trick, as yet to be perfected, is to predict when cycles of growth are peaking and troughing, and adjust interest rates pro-actively to suit.
The problem is that often these two events lag each other, so boom/bust cycles are created. If you can build a model to perfectly predict these patterns of activity, you could sell it to the Bank of England for a blank cheque!
House price effects are to be honest just a tiny cog in the scheme of things, though of course they affect us more directly than many of the other influences.
As regards supporting the growing number of pensioners, well, i reckon that "State pension" will be something you'll be reminiscing to your grandchildren about! Something radical will have to happen soon, it has to.
The problem is that often these two events lag each other, so boom/bust cycles are created. If you can build a model to perfectly predict these patterns of activity, you could sell it to the Bank of England for a blank cheque!
House price effects are to be honest just a tiny cog in the scheme of things, though of course they affect us more directly than many of the other influences.
As regards supporting the growing number of pensioners, well, i reckon that "State pension" will be something you'll be reminiscing to your grandchildren about! Something radical will have to happen soon, it has to.
16 October 2003, 04:42 PM
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Telboy - 100bp by the end of the year? Are you kidding? Wage inflation is low and the housing mkt is cooling - and UK rates are still 1.5% ahead of EuroZone when we're still supposed talking convergence -and the treasury's switching the the HCIP index, so inflation becomes less of a problems as its currently running about 1.5% below RPIX....
25bp max by year end.
25bp max by year end.
16 October 2003, 08:52 PM
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Heres a more recent post, just for pslewis 
This is what I was talking about anyway
(honest!)
http://www.business.scotsman.com/top...&id=1144222003
And corner to me again lewis, u MUPPET!!!
[Edited by Jye - 10/16/2003 8:54:56 PM]
This is what I was talking about anyway
(honest!)http://www.business.scotsman.com/top...&id=1144222003
And corner to me again lewis, u MUPPET!!!
[Edited by Jye - 10/16/2003 8:54:56 PM]
16 October 2003, 11:05 PM
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FROM the SCOTSMAN??????????????????
Thats not even a paper FFS!!! just a bunch of skirt wearing Gold Wheel owners playing at writing articles with about as much sense in them as Jye's posts!!
Pete
Thats not even a paper FFS!!! just a bunch of skirt wearing Gold Wheel owners playing at writing articles with about as much sense in them as Jye's posts!!
Pete
17 October 2003, 09:08 AM
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Back on topic...
Jye, yes you're absolutely right, BoE was given autonomy in May 97, which in theory is supposed to make their judgements a-political. The thing is, i don't think the BoE ever was political, except in really exceptional circumstances such as Black Wednesday, so i don't think it was a dramatic change.
But even the boffins at BoE can't predict everything accurately. The UK economy is complex enough, without having to take into account all other influences from around the world. It's a treacherous business being an economic forecaster, in that if you're right, that's what you're paid to do, if you're wrong, what the Hell were you thinking?!!
On balance, i think BoE does a good job. I thought Eddie George was a good governor, i think Mervyn King is a decent replacement. They're certainly more pro-active than the ECB, and have successfully detached themselves from the US Federal Reserve, even though we're broadly in the same economic cycles as the US. Management of the next few years will however be more difficult than the previous three or four in my opinion. Hiking rates is never popular!
Boss Hogg, i think you mis-read my post. I totally concur with your prediction - 25bps by the end of this year, then i think a further 75bps by the end of next year.
Jye, yes you're absolutely right, BoE was given autonomy in May 97, which in theory is supposed to make their judgements a-political. The thing is, i don't think the BoE ever was political, except in really exceptional circumstances such as Black Wednesday, so i don't think it was a dramatic change.
But even the boffins at BoE can't predict everything accurately. The UK economy is complex enough, without having to take into account all other influences from around the world. It's a treacherous business being an economic forecaster, in that if you're right, that's what you're paid to do, if you're wrong, what the Hell were you thinking?!!
On balance, i think BoE does a good job. I thought Eddie George was a good governor, i think Mervyn King is a decent replacement. They're certainly more pro-active than the ECB, and have successfully detached themselves from the US Federal Reserve, even though we're broadly in the same economic cycles as the US. Management of the next few years will however be more difficult than the previous three or four in my opinion. Hiking rates is never popular!
Boss Hogg, i think you mis-read my post. I totally concur with your prediction - 25bps by the end of this year, then i think a further 75bps by the end of next year.
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