Bank of England's Inflation Target

[Fittster]

"For 42 of the past 51 months, inflation has been above the Bank's 2pc target. And, since April 2007, King has had to write seven letters of explanation to the Chancellor – the first since 1992."


Hmm,

"LONDON (Reuters) - British inflation will fall well below its 2 percent target in two years, even if interest rates remain at record lows, the Bank of England said on Wednesday, leaving scope for further policy easing if the economy worsens."

Edited by Fittster on Wednesday 11th August 11:35

[XJSJohn]

Is Merv trying to take over where Winky left off?

I still wonder if keeping BOE Base rate so low is a good thing too?? The UK looks like it is heading for a somewhat Japanese style Stagflation situation.

[NoelWatson]

XJSJohn said:

Is Merv trying to take over where Winky left off?

I still wonder if keeping BOE Base rate so low is a good thing too?? The UK looks like it is heading for a somewhat Japanese style Stagflation situation.

Interest rates need to be kept low in an effort to support house prices at ludicrous levels for as long as possible to enable people to pay down their debt. Of course, they haven't done that, but at least it sounded like a good plan at the time.

Edited by NoelWatson on Wednesday 11th August 08:12

[NoelWatson]

Merv is speaking now

[Wanta996Gotta]

musclecarmad said:

RPI up at 5%.

Everything is soaring price wise.

Inflation is high and it will only get higher - I don't know why the whole bank of england mpc havent been sacked.

Its been way over target for ages, we have a vat rise coming and they have been constantly wrong over inflation.

Who would you rather make the call? It was always going to be difficult in current climate and thats what makes Gideons predictions in the budget laughable as he based it on the BOE's "prediction" which has just changed.

There are rumours that America are going to flush more money into the system to stop them going back into recession. The exact opposite of what the Con-Dems are going to do.

[Wanta996Gotta]

musclecarmad said:

Wanta996Gotta said:

musclecarmad said:

RPI up at 5%.

Everything is soaring price wise.

Inflation is high and it will only get higher - I don't know why the whole bank of england mpc havent been sacked.

Its been way over target for ages, we have a vat rise coming and they have been constantly wrong over inflation.

Who would you rather make the call? It was always going to be difficult in current climate and thats what makes Gideons predictions in the budget laughable as he based it on the BOE's "prediction" which has just changed.

There are rumours that America are going to flush more money into the system to stop them going back into recession. The exact opposite of what the Con-Dems are going to do.

I wouldn't write off the UK and QE just yet!

I agree.......at the moment - My business is thriving. My only concern is what happens when these cuts appear next year and we all start to feel the Con-Dems solution to the problem.

[oyster]

Wanta996Gotta said:

musclecarmad said:

RPI up at 5%.

Everything is soaring price wise.

Inflation is high and it will only get higher - I don't know why the whole bank of england mpc havent been sacked.

Its been way over target for ages, we have a vat rise coming and they have been constantly wrong over inflation.

Who would you rather make the call? It was always going to be difficult in current climate and thats what makes Gideons predictions in the budget laughable as he based it on the BOE's "prediction" which has just changed.

There are rumours that America are going to flush more money into the system to stop them going back into recession. The exact opposite of what the Con-Dems are going to do.

The budget was based on the OBR's prediction not the BoE's. The OBR forecast 3.6% growth next year and the BoE 2.5% - not much variance there.

[NoelWatson]

Wanta996Gotta said:

There are rumours that America are going to flush more money into the system to stop them going back into recession. The exact opposite of what the Con-Dems are going to do.

Can you run me through this please

[s2art]

oyster said:

Wanta996Gotta said:

musclecarmad said:

RPI up at 5%.

Everything is soaring price wise.

Inflation is high and it will only get higher - I don't know why the whole bank of england mpc havent been sacked.

Its been way over target for ages, we have a vat rise coming and they have been constantly wrong over inflation.

Who would you rather make the call? It was always going to be difficult in current climate and thats what makes Gideons predictions in the budget laughable as he based it on the BOE's "prediction" which has just changed.

There are rumours that America are going to flush more money into the system to stop them going back into recession. The exact opposite of what the Con-Dems are going to do.

The budget was based on the OBR's prediction not the BoE's. The OBR forecast 3.6% growth next year and the BoE 2.5% - not much variance there.

I think thats a typo. Did you mean 2.6% from the OBR? I note that the OBR assumes a weaker trend than the BoE at approx 2.35% dropping to 2.1% in 2013.

[NoelWatson]

Wurls said:

NoelWatson said:

XJSJohn said:

Is Merv trying to take over where Winky left off?

I still wonder if keeping BOE Base rate so low is a good thing too?? The UK looks like it is heading for a somewhat Japanese style Stagflation situation.

Interest rates need to be kept low in an effort to support house prices at ludicrous levels for as long as possible to enable people to pay down their debt. Of course, they haven't done that, but at least it sounded like a good plan at the time.

Edited by NoelWatson on Wednesday 11th August 08:12

No enablement needed in order to pay down debt. The ensuing inflation will erode that debt just nicely. Ouch.

Inflation? I see very little of that - wages were 1.3% today

[s2art]

NoelWatson said:

Wurls said:

NoelWatson said:

XJSJohn said:

Is Merv trying to take over where Winky left off?

I still wonder if keeping BOE Base rate so low is a good thing too?? The UK looks like it is heading for a somewhat Japanese style Stagflation situation.

Interest rates need to be kept low in an effort to support house prices at ludicrous levels for as long as possible to enable people to pay down their debt. Of course, they haven't done that, but at least it sounded like a good plan at the time.

Edited by NoelWatson on Wednesday 11th August 08:12

No enablement needed in order to pay down debt. The ensuing inflation will erode that debt just nicely. Ouch.

Inflation? I see very little of that - wages were 1.3% today

Isnt much of the debt immune from inflation? That is if inflation is higher then the debt repayments will be higher.

[anonymous-user]

s2art said:

Isnt much of the debt immune from inflation? That is if inflation is higher then the debt repayments will be higher.

200bn in index linked gilts
1200bn+ in index linked public sector pensions

[s2art]

Wurls said:

s2art said:

NoelWatson said:

Wurls said:

NoelWatson said:

XJSJohn said:

Is Merv trying to take over where Winky left off?

I still wonder if keeping BOE Base rate so low is a good thing too?? The UK looks like it is heading for a somewhat Japanese style Stagflation situation.

Interest rates need to be kept low in an effort to support house prices at ludicrous levels for as long as possible to enable people to pay down their debt. Of course, they haven't done that, but at least it sounded like a good plan at the time.

Edited by NoelWatson on Wednesday 11th August 08:12

No enablement needed in order to pay down debt. The ensuing inflation will erode that debt just nicely. Ouch.

Inflation? I see very little of that - wages were 1.3% today

Isnt much of the debt immune from inflation? That is if inflation is higher then the debt repayments will be higher.

The notional is fixed. The interest is variable.

The public sector pensions part of the nominal debt isnt fixed.

[oyster]

s2art said:

oyster said:

Wanta996Gotta said:

musclecarmad said:

RPI up at 5%.

Everything is soaring price wise.

Inflation is high and it will only get higher - I don't know why the whole bank of england mpc havent been sacked.

Its been way over target for ages, we have a vat rise coming and they have been constantly wrong over inflation.

Who would you rather make the call? It was always going to be difficult in current climate and thats what makes Gideons predictions in the budget laughable as he based it on the BOE's "prediction" which has just changed.

There are rumours that America are going to flush more money into the system to stop them going back into recession. The exact opposite of what the Con-Dems are going to do.

The budget was based on the OBR's prediction not the BoE's. The OBR forecast 3.6% growth next year and the BoE 2.5% - not much variance there.

I think thats a typo. Did you mean 2.6% from the OBR? I note that the OBR assumes a weaker trend than the BoE at approx 2.35% dropping to 2.1% in 2013.

Yes sorry, I meant OBR forecast of 2.6%.