Another record for eurozone inflation

4% and surely not going significantly down anytime soon

“One analyst said the figure ‘rubber stamps’ an ECB rise on Thursday.”

some people on here are often heard to quote probabilities implied by forward rates. Any update on this? Surely a 25bps rise is just about guaranteed now?

0.5% anyone?

imagine :open_mouth:

So where are the interest rate rises?AS all central bankers know inflation is going to get a whole lot worse so why aren’t they increasing rates now to prevent it?Mervyn King is fully preparing himself to write letters to Gordon Brown all the way up to 4% inflation later this year and next year(his prediction of inflation)so they know the rates they are targetting are breached and will go to a full 2% above target and yet there are no interest rate rises!!!

This is all part of the planned crisis to force the UK into the EURO. The pound will collapse,helped by repeated cuts in interest rates by the Bank of England to save the banks/building societies and the UK economy (read housing market)perhaps further runs on the banks a la Northern Rock, the Bof E runs out of money to support the banks and sterling and goes to the ECB/IMF for emergency funding and one of the many conditions for the loan are that the UK joins the Euro - they know there is no other way to get us to join.

More conspiracy craziness?Have a read of the Telegraph and see how commited central bankers are to fighting inflation. … ays127.xml

Possibly the right thing to do looking at their one and only remit but can’t see it happening in the current environment.

Would really put the cat among the pigeons tho!

The US Fed is running negative real interest rates, and is responsible for a lot of commodity price inflation imo.

Greenspan was a clown and Bernanke is another one.

Get Volker in there ffs!!

THe Fed is not alone in running negative real interest rates, the ECB and the BofE are also running negative real interest rates whilst at the same time lying about being commited to fighting inflation and indeed targetting inflation within supposedly fixed bands, what a joke.

Xman - your picture alongside your name sums the situation up perfectly I was going to use it myself until I realised you got there first, Bernanke throwing dollars from a helicopter. No folks this isn’t a joke, he actually said he would throw money from a helicopter if that was what was needed to breathe life into the American economy,tongue in cheek at the time maybe but he certainly is the man for the job as far as bankers are concerned, all the debt built up is now going to be magically waved away by inflation, this is coming from an academic who firmly believes the depression of the 1930’s was caused by central banks raising rates instead of cutting them - his Phd thesis was on this very subject.

The ECB has signalled a token quarter point rise to 4,25% in Juy and that in my opinion is IT. After that the only way is down, way down,they will keep cutting interest rates just like the Fed in response to both the worsening economic picture and the increasingly precarious financial health of the European banks. Inflation is going into orbit, it is the 70’s all over again - hyperinflation,runaway oil prices - but this time there won’t be the interest rises to combat the inflation since banks now control interest rates not governments,spray the glitter, zip up the Oxford bags, iron the butterfly collar shirt, polish the pod and platform shoes coz mama,mama,mama were all crazeeee now…

That won’t happen. Central banks believe the only appropriate response is for tighter monetary policy, even under a stagflationary environment. They 100% believe that reducing interest rates while inflation is accelerating and output falling would only exacerbate any recession, while fueling inflation at the same time - disaster a la 1970s.

That is where silly Comical and Desperate got it so wrong. This is pretty basic macroeconomics.

If central banks believe that it is 100% the right thing to do to increase interest rates and hence kill inflation then why haven’t they done it already?Inflation is way above their respective tatgets and has been for some time: so what are they waiting for? Inflation to be 5% above or 10% above?Put simply the ECB will look after the European banks balance sheets and profitability before they even considering long term savers or those on fixed incomes, and I’m afraid the two are mutually incompatible, they cannot look after the banks and cure inflation at the same time since it is impossible, it requires two sets of diametrically oppposed economic policies. To fight inflation at its current and predicted levels wuold require massive increases in interest rates, and to fix the mess on pan European bank balance sheets will require huge reductions in interest rates i.e let the banks borrow from the ECB at rates much lower than they are at present and widen their margins and therefore increase their profitability, in other words a re-run of what happened after the dot com collapse a massive inflationary bubble.

Therefore the cure is to simply repeat the set of policies that got us into this mess in the first place, total insanity but which one do you think the ECB and Bof E will take(the FED have already shown their cards)?
Lie to the people and reward the scheisters,liars,speculators,punish savers and those on fixed incomes and the entire third world where inflation means having to eat less and less every day or do the right thing and put the inflation monster to the sword?

I’m sorry but there is absolutely no evidence of the ECB’s commitment to fighting inflation other than empty words.

Until now, european rates were slightly positive in real terms - the unusually high euribor spread helped make them a bit more positive.

And my opinion differs - there is absolutely no way that euro rates will drop until inflation is close to the 2% target, and looking like it will undershoot.

And the reason governments don’t control them is because the market trusts an independant central bank more - and this trust is because independant central banks make decisions on rates based on economics not politics.

The 1970 showed that inflation requires even higher rates to get back under control, so any temporary gain from low interest rates will come back to bit several times over.

In all fairness while the Fed cut drastically (325bp) the ECB has not flinched, after following the Fed down the garden path in 2001.

And on Thursday we might see some commitment.

OTOH, I’ve heard a lot ‘talking tough’ over the past year as inflation has been allowed to reach double the target level with no corrective action taken.

Action speaks louder than words.

Because the euribor spread growing did effectively the same thing - unfortunately inflation is proving a bit more determined than expected, and the ECB will need to raise rates as well - which they’re going to start doing.

The ECB will fold banks before tolerating long-term high inflation.

They come from the german school of monetary policy, and if you look up US, UK, and german inflation rates in the 1970s, you’d see the difference - the germans raised rates earlier and further than the US / UK to kill off inflation, and didn’t need anywhere near as much raising later on.

I think that is quite simple.

While ECB want stable prices, they also need to ensure the stabiliity of the financial system. Events of the last year has left them uncertain about what unwanted side effects a rate increase might bring (i.e. banking collapse). They put things on hold as they dealt with the biggest immediate threat and now seem confident enough that the system is in a strong enough state to increase rates.

The ECB also had to allow for the effect of the credit crunch - it is rather difficult to predict how much of a ‘raise equivalent’ that represented, so they needed to move carefully. Personally, i think they’ve done a great job, far better than the Fed did, since the crunchies hit.

on the issue of the UK & Euro,

I have a “friend of a Friend” who works in the BOE printing dep’t.

Apparently, he has seen the test prints for the UK version of the Euro bank notes, dated 2009


And he would recognise them as the ‘UK’ versions how - aren’t all euro notes the same (except for the serials of course)?

surely it’d take more than half a year to get ready for entry to the eurozone?

THe Bank of England is an appointed printer of Euro bank notes. Doesn’t mean the UK is going to use them, it is just a job.
Here is a handy map from the Bundesbank:

ETS: Just to note, your friend must work for De La Rue plc, as this is the company to which the BoE sold their printing operation a few years ago. De La Rue plc show up on that map as the UK based printing works for the Euro.

Raging Bear
Sorry to keep arguing the preverbial toss, but everyone knows that central bank inflations figures are a complete and utter joke. Inflation 3%? do me a friggin favour, who really believes that? Wheat, oil.soya,gold, food in general has got to be up over 10% in the last year. China, the reason central banks supposedly kept rates so low as their import prices helped to keep prices down, is now suffering from hyperinflation as a result of the Fed’s policies and this is now adding to the inflation created by the western banks as the Chinese now increase the prices for all the preposterously cheap products they once exported to us.

Stop believing the bullshit and the hype and see what is before your very eyes every day you go out and buy your everyday goods, then ask yourself what is MY rate of inflation? The offficial inflation figures have become so dis-credited that over here in England they mock the “real” figures as the “Chav” price index in other words the cost of living to those on benefits whose main purchases are fags,diamond white cider,sky tv subscriptions,flat panel tv’s,fake Burberry clothes from the local market etc etc you get the picture,in other words only the things that seem to continually fall in price are included in the calculations. There is also a website where you could also plug in your own personal financial circumstances to calculate your personal inflation rate if you didn’t think the government figure acccurately represented your circumstances!!! If you think this is bizarre and totally representative of the madness that surrounds us - think again - it is actually a government website:

So if you know the government are lying, the government will actually provide the proof by providing a website for you to calculate the degree of the deception!!!
Rock on !!!