The Running Commentary

Well I got this wrong!!

CPIX trackWell I got this one wrong! No interest rate hike! I must say though, in mitigation of my previous post, the fact that oil prices have come down to the levels that they have would not have been predicted by even the most optimistic financier.The effect that this will have on food inflation means that this should halt or stall inflationary pressure. The timing may also have something to do with the Investec report, although I think that the oil price and the sharp cooling of the economy will be the MPC’s main reasons for the halt in rate hikes.

One of the issues that had to be factored is that further rate increase would have created further inflationary pressure which may have result in the inflation peaking above the interest rate. If this happened then we would have seen many pensioners suffering as their investments would not have been able to sustain them.

While this is all really great in that I think that people could not really have absorbed further hikes, the real effect of the halt and eventual decline in the rates will only be seen on the street in 8 months or more. Remember the lag effect.

What we all should continue focusing on is clearing the debt, the interest burden is still very high, do not think that we are out of the woods by any stretch of the imagination. Look to clearing your troublesome debt first and then focuses on clearing the big stuff.

Deliver yourself from debt!!

cutsdebtEconomyInterest RateInvestecMPCsaving

Mike • August 15, 2008

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