Originally posted by sasguru
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Inflation to worsen ...
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Originally posted by Bagpuss View PostLike a stopped clock, he is right some of the timeǝןqqıʍComment
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Originally posted by TimberWolf View PostWhat if house prices were incorporated in the official inflation index calculation? If this should become too negative, he could always add in some inflationary items to compensate, such as council taxes and food?Comment
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Originally posted by BrilloPad View PostI have often thought that. It might have worked if done in 1997. I would hate to add in house price inflation from current high levels - but with a snake like El Gordo who can tell...Comment
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Originally posted by rootsnall View PostWe did use the RPI ( including mortgage payments and hence reflects house price inflation ) and the target was 2.5%. They switched to CPI ( no mortgage payments and other things excluded ) and a target of 2%. With the old RPI measure interest rates would have been consistently higher over te past few years. And yes the obvious El Gordo trick will now be to switch back to the RPI measure as it starts falling ( or not looking as bad as the CPI figure ).
mortgage payments partly reflect interest rate (BP in state the obvious mode) so if you raise interest rates to target inflation by raising interest rates, RPI inflation goes up. Hence circular.
So I would like a BPPI - CPI plus house prices. Better still - CPI plus 3* average earnings(which is where house prices should be?).
I need a lie down now.....Comment
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Originally posted by BrilloPad View Postmortgage payments and house price inflation are seperate - we could debate the link. but one thing - debt is reeality - price is vanity. if people invest in houses instead of stock market - prices will rise. until people buy who need a mortgage. this is getting complicated - my head hurts - where is atw with the right answer?
mortgage payments partly reflect interest rate (BP in state the obvious mode) so if you raise interest rates to target inflation by raising interest rates, RPI inflation goes up. Hence circular.
So I would like a BPPI - CPI plus house prices. Better still - CPI plus 3* average earnings(which is where house prices should be?).
I need a lie down now.....
If they had used RPI with a target of 2.5% it would of meant higher interest rates and lower house prices.Comment
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