On Tue, 19 Jan 2010 13:13:06 +0000, Paul Harris
wrote:

In message
, mick
writes
As the VAT increase came in on Jan 1st the rate for this month is
likely to to go over 4%. This looks like stagflation. The BOE is
forecasting a drop, suppose it carries on rising to over 5% surely
they will raise interest rates to 3 or 4% immediately.

The rate for December was 2.9 against a City predicted rate of 2.6 this
is against the falling price of oil a year ago and the cut in VAT that
took place at that time. There will be some concern that the rate was
above prediction but they are unlikely to act at this time as a rise in
interest rates would be counter productive in other areas such as the
building industry. The target is 2% if it stays above that level or
increases then they may have to consider taking action.

I think it unlikely that interest rates will rise while quantative
easing is still continuing. That really would be crazy.

The BoE predicted than inflation will rise in the short term and fall
back later this year. In this case it is unlikely that interest rates
will rise soon.

The outcome of the general election could change all this though.
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