There are a couple of rules-of-thumb which must be learnt:1. If inflation rises for several consecutive months, raise interest rates slightly. Wait a bit. If inflation is still rising, then raise interest rates again.
2. If economic growth is falling and inflation is low, then lower interest rates.
You now know everything that a Bank of England economist knows.
The European Central Bank is calling the shots for us now and of late they have been turning up the heat. Our property bubble is so enormous at this stage that if Jean-Claude Trichet farts in the next few months we could be in trouble. If (and I suppose when) it bursts it could make your property market fiasco a few years back look like the teddy bears' picnic.
ReplyDeleteYou mean there's a European Central Bank now? Did that come with the Euro?
ReplyDeleteYea, yea, you Brits. Think you're better than the rest of us. We good Europeans will have the last laugh.
ReplyDeleteI remember people predicting at the beginning of 2003 that the property 'bubble' in the UK was about to collapse.
ReplyDeleteIs there still a bubble, or has there been a fundamental increase in the value which people assign to owning property, as a proportion of their lifetime earnings?