The Bank of England may have to cut rates to combat low inflation
 

http://www.bbc.co.uk/news/business-34291815

Combat low inflation? I thought the game all along was to keep inflation down? :dunce:

Re: The Bank of England may have to cut rates to combat low inflation
 

What you have to watch is the risk of deflation which is no good for no one.

Re: The Bank of England may have to cut rates to combat low inflation
 

Andy Haldane appears to be a lone voice in saying that...

Re: The Bank of England may have to cut rates to combat low inflation
 

I was only hearing the other day how wage inflation is on the way up with the risk of an overheating economy... :shrug:

Re: The Bank of England may have to cut rates to combat low inflation
 

deflation is good for the poor who often dont get increases in income.

I personally certainly prefer deflation to inflation.

Does seem daft when they been trying for years to get inflation down.

Basically tho it depends on your situation.

If you got piles of debt then high inflation is heaven, it devalues your debt. In particular its great for those with a mortgage.
If on the other hand you have lots of savings, then high inflation is bad, it devalues your savings.
If you have a static income such as benefit claimants or a dead end job, then inflation is likewise bad.

Re: The Bank of England may have to cut rates to combat low inflation
 

Why am I not surprised ...

Deflation is not good for anyone. When people think the price of a new car, TV or computer will be lower in six months because of deflation, then they are more likely not to buy one because they want to wait for the lower price. Multiply that across a whole economy and you get the mother of all recessions, risk an all-out depression, and watch businesses lay off staff to cut their costs. That works wonders for the poor.

Like it or not, our economic system requires an element of inflation in order to function correctly. There is no reason why this should be bad for people who are on benefits or pensions because, under normal economic conditions, a government should be able to uprate payments annually in order to preserve the real-terms value of the benefit.

Don't think for one second that they would not cut payments in cash terms, if we became mired in long-term deflation, using the argument that the measure was real-terms neutral.

Re: The Bank of England may have to cut rates to combat low inflation
 

Thats a valid point I guess, although ultimately waiting to see if something gets cheaper is always a gamble.

Take smartphones as an example, its a very high chance they will go down in price when waiting for a while after release day, yet they get pre orders in the 10s of millions and most people buy specific models within a month or two of release.

So whilst I agree "some people who are addicted to always getting the best value may wait, I dont think it will apply to a majority.

As a reference JSA would be at least £15 higher a week if it followed inflation in recent years. Public sector workers are fighting for 1% rise in wages never mind inflation matching rises.

Re: The Bank of England may have to cut rates to combat low inflation
 

Newly released, high-end tech isn't a very good example in this case. Such items are always going to be more highly priced in their first few months of release as manufacturers try to recoup their development costs at the expense of early adopters who are more willing to pay a premium for the latest toy.

Deflation, remember, works across the economy, and it is the affect on expensive commodity goods like computers, Hi Fis, TVs, watches, cars etc, and even certain services like holidays, that overall, has a depressing effect on economic activity.

Re benefits, I did qualify my earlier post with "in normal economic times" - most of the last decade has not been normal, and compared to historic averages, inflation and interest rates are still far from normal.

If public sector workers achieve a 1pc pay rise then that would be an above-inflation settlement, on current figures.

Re: The Bank of England may have to cut rates to combat low inflation
 

An accurate statement but for completeness it should be qualified against the backdrop of a 4-year public sector pay freeze.

Public sector pay is way behind the private sector, on current figures.

Re: The Bank of England may have to cut rates to combat low inflation
 

This report from the IFS last October contradicts that statement.

http://www.ifs.org.uk/uploads/public.../comms/r97.pdf

Re: The Bank of England may have to cut rates to combat low inflation
 

Yes, let's all sit down and read through 51 pages to find the bit you're referring to ... :p:

Re: The Bank of England may have to cut rates to combat low inflation
 

Well I get the idea that the Conservative "Living Wage" is going to do several things: push up prices (and therefore inflation) and push up unemployment. Therefore the increase in wages that the low paid will see, will soon be swallowed up by inflation. And then comes the next increase in the "Living Wage".....

And then the Bank of England might put up interest rates, which could stifle investment in business.

Re: The Bank of England may have to cut rates to combat low inflation
 

Anyone for a rock or a hard place?

Re: The Bank of England may have to cut rates to combat low inflation
 

Executive Summary, page 1 and 2 ;)

To summarise the summary -

In raw terms, pay levels are higher in the public sector than in the private sector. However, after accounting for differences in education, age and where workers live, the differences are much smaller. Among men, the average public sector pay differential in 2013–14 was close to zero, while among women it was around 8%.

Which contradicts the previous statement

Public sector pay is way behind the private sector, on current figures.

Re: The Bank of England may have to cut rates to combat low inflation
 

That report is a year old and can't be regarded as current.

Re: The Bank of England may have to cut rates to combat low inflation
 

Yes, because private sector pay has surged in the last year.....

Re: The Bank of England may have to cut rates to combat low inflation
 

The report is over a year old; the information compiled within it is even older.

Re: The Bank of England may have to cut rates to combat low inflation
 

The data is up to March 2014, and the report is October 2014.

I provided evidence - perhaps you could provide some to back up your assertion....

Re: The Bank of England may have to cut rates to combat low inflation
 

Evidence of what? It refers to pay differentials, NOT pay levels or increases. It even says that public sector pay is HIGHER. Do the massaged figures have a valid comparison with all areas of the private sector or just things like cleaners.

Re: The Bank of England may have to cut rates to combat low inflation
 

The poster stated I disagreed, using the latest figures I could find to support what I stated - I was just asking him to do the same for his assertion that Public Sector pay was way behind Private Sector pay.

The report also discusses average pay levels, as well as differentials - including Section 2.4 in page 15

Re: The Bank of England may have to cut rates to combat low inflation
 

So what does this means for those of us with savings?:erm:

Re: The Bank of England may have to cut rates to combat low inflation
 

If you're lucky, you get 2% on a 3 year cash ISA....

Re: The Bank of England may have to cut rates to combat low inflation
 

Cut rates? From what to what?

Not really that much room for manoeuvre.

I'll be happy for rates to stay where they are for the next few years, I'm really making a dent in the mortgage.

Re: The Bank of England may have to cut rates to combat low inflation
 

Not exactly an inducement for people to save for a rainy day which is what we're told HMG wants us all to be doing... :spin:

Re: The Bank of England may have to cut rates to combat low inflation
 

Only the retired get taxpayer subsidised savings for right now.

Re: The Bank of England may have to cut rates to combat low inflation
 

Your source of 'evidence' is old. Its content is the personal view of its 3 authors and whose personal view is no more relevant than mine.

It was indirectly funded by a Government seeking to reduce its wage bill but it is no doubt impartial if irrelevant to current figures.

Since its compilation circumstances have imho changed.

Re: The Bank of England may have to cut rates to combat low inflation
 

Your attempt to create equivalence between your opinion and that of the report's authors is faulty. There is no automatic equivalence between opinions. Everyone has a right to be heard, but they do not have the right to be equally correct. The views in the report linked by Hugh are backed by rigorous research and use of evidence. The contrary view, which you seem to hold, is backed by ... What?

Re: The Bank of England may have to cut rates to combat low inflation
 

I did not say there was equivalence. I said there was difference and holding a different view is a democratic right.

A layman does not have the resources or Government funding to definitively validate a view but it doesn't make that view wrong, especially when it hasn't been disproved.

The 'rigorous' research offered as 'evidence' is nothing more than a personally held opinion (as is mine) dressed up in a fancy report with implied association to the IFS; it is out-of-date and arguably tainted with deference to its paymaster.

The figures it presents have ceased to be relevant to the current position; in my view of course.

It seems neither opinion is backed by anything substantive nor can it be until an official, government-prepared or funded report is available and that will be unbiased too...:D

Re: The Bank of England may have to cut rates to combat low inflation
 

Erm, no - people don't have to disprove views, otherwise anyone could make up any old crap and say 'but you can't prove me wrong'.

Informed, intelligent discussion is based on facts - saying you don't have any facts, but that your opinion is as equally valid as those who base their opinions on evidence, is a viewpoint also shared by creationists, anti-vaxxers, 9/11 Truthers, and UFOologists.

Nice try in calling extensive research compiled and presented by Britain’s leading independent microeconomic research institute as a personally held opinion just like yours.....;)

Re: The Bank of England may have to cut rates to combat low inflation
 

This is the central point of contention. The evidence-based conclusions in the report are *not* merely a personal opinion. Re-phrase it as much as you like, your personal opinion does not weigh the same as evidence-based conclusions.

You may exercise your democratic right to be heard, however you have no democratic right to have your personal opinions taken seriously. That must be earned.

Re: The Bank of England may have to cut rates to combat low inflation
 

Informed, intelligent discussion is based on current facts, not old, out-of-date reports.

No need for re-phrasing; it's there in black and white.

Re: The Bank of England may have to cut rates to combat low inflation
 

I look forward to you presenting some, as you haven't so far...




Yes it is - it states "The facts presented ", not opinions....

Re: The Bank of England may have to cut rates to combat low inflation
 

That's a statement of attribution. It tells us the statements are the views of the author, not their employer. It is not an attempt to equate their researched, considered conclusions with the ill-informed opinions of a random internet user.

Re: The Bank of England may have to cut rates to combat low inflation
 

In relation to current figures, nor have you ;)

And the statement I have made is the view of the author ;)

Re: The Bank of England may have to cut rates to combat low inflation
 

You made the initial assertion, up to you to back it up.... ;)

Re: The Bank of England may have to cut rates to combat low inflation
 

You can go on avoiding the issue as long as you like - we have proof that the views of Cribb, Emerton and Simieta are based on thorough analysis of available data. We have no proof of what yours are based on.

Thus far, we are entitled to defer to the hard work and expertise of the authors, whilst treating your views as the random, ill-informed opinion of an internet user.

Unless, of course, you are about to impress us with the as-yet unrevealed research material that has informed your opinion?

Re: The Bank of England may have to cut rates to combat low inflation
 

And you countered that assertion with, erm, nothing of relevance. :erm:

The available data is no evidence of current figures. That report is useless for informing today's debate and/or today's political decisions. It is the official form of used chip paper. :D

Re: The Bank of England may have to cut rates to combat low inflation
 

You may hold that to be the case - I suspect most people who know anything about the subject, consider it to be current enough to be useful.

Re: The Bank of England may have to cut rates to combat low inflation
 

A week is a long time in politics. Data in this context that has an ephemeral nature is positively archaic.

People who know anything about the subject of shopping will check their purse just before they buy, not 2 years sooner :)

Re: The Bank of England may have to cut rates to combat low inflation
 

So many posts, so little proof ... ;)

Re: The Bank of England may have to cut rates to combat low inflation
 

And FWIW, I agree with you! :)

Re: The Bank of England may have to cut rates to combat low inflation
 

I am glad you agree your proposition regarding "current figures" cannot be substantiated, as you have not provided any.... ;)

Re: The Bank of England may have to cut rates to combat low inflation
 

Oh for goodness sake Dick and Dom, you win by attrition, now leave me alone already :p:

Re: The Bank of England may have to cut rates to combat low inflation
 

Actually, I wasn't trying to win, I was looking for any later figures than the ones I found (as I couldn't find any)...

Re: The Bank of England may have to cut rates to combat low inflation
 

It's not currently in the public domain (if there is any that is :D).

Anecdotal evidence would of course be shot down by you and your evil twin. Also, I've learned not to antagonise too much and on that note...

I'm done :)

Re: The Bank of England may have to cut rates to combat low inflation
 

Some evidence to support your statement.

Grauniad

Re: The Bank of England may have to cut rates to combat low inflation
 

Thanks, I am touched by your magnanimity :); now, where has that rebellious Scot gone? :D