ECB to raise interest rates

[watch-this-drive]

As it will be only a matter of weeks before the ECB starts to hike rates here is an interesting article -

http://www.economist.com/agenda/display ... id=5220280

Bernanke and Trichet are new kids on the block, they will have to prove they are serious about fighting inflation

[eurocrat]

Not sure if Inflation is a big concern in Europe at the moment. Struggling economies such as Germany tend to have low inflation (althoguh with a 3% rise in VAT in 2007 in may well be).

However, a slow rise in income rates could be postive for Ireland. I can't see the ECB doing anything to crazy over the next year. Its quite a conservative insitution. I think we can 0.5% of a rise at the very most.

Like I say may not be such a bad thing for Ireland on a Macro level. We all know a cooling of the housing market (a normalatisation might be a better word) would not be all that negative.

Plus, surley we all knew rates could only go in one direction from here and have saved accordingly.....

[watch-this-drive]

I think we can 0.5% of a rise at the very most.

forecast for 12 months is between .5 and .75 with more saying .75

Plus, surley we all knew rates could only go in one direction from here and have saved accordingly.....

:wink:

[hiker]

I read somewhere recently that nobody knows where inflation comes from. There are loads of theories as to why prices rise or fall but there is no definitive formula.

I've often thought that if you look inside the door of your local stockbroker and your local bookmaker you would see the exact same economic activity take place.

How does the ECB know whats going to happen? The report on the link has lots of ifs and buts in it.

[watch-this-drive]

I read somewhere recently that nobody knows where inflation comes from. There are loads of theories as to why prices rise or fall but there is no definitive formula.

I've often thought that if you look inside the door of your local stockbroker and your local bookmaker you would see the exact same economic activity take place.

How does the ECB know whats going to happen? The report on the link has lots of ifs and buts in it.

If an economy is flooded with money - historically low interest rates have been the norm in the US, EU and Japan for the last 4 years - prices will inflate.
A wage/price spiral will do the same.

[FutureTaoiseach]

Doubt they would do it with the German and French economies still in a mess.

[Bilo]

I read somewhere recently that nobody knows where inflation comes from. There are loads of theories as to why prices rise or fall but there is no definitive formula.

Inflation = expansion of the money supply

If more money is available, prices will tend to rise.

[eurocrat]

Doubt they would do it with the German and French economies still in a mess.

You are wrong. I love telling people like you that.