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Is rising inflation looming?

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TheMotorcycleBoy
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Re: Is rising inflation looming?

#319476

Postby TheMotorcycleBoy » June 18th, 2020, 4:39 pm

dealtn wrote:...Basically doing "something" is better than "nothing", because stimulus means getting out of the economic mess quicker than not stimulating, which means stronger economy and stronger pound. This is an FX article after all.

Now its debateable whether many parts of that are true or not. Stimulus is better than not. Stimulus means better economy. Better economy means stronger currency. But that's the gist of the comment....

Thanks that bit makes sense.

FWIW, the £150-200B were only estimates by others:

For the reaction in sterling, the "Old Lady" fell short of estimates of some participants which foresaw an expansion of £150 to £200 billion.
(from https://www.fxstreet.com/analysis/boe-q ... 2006181124)

Whereas the extra £100B, is confirmed by slightly less tatty outlets:

https://www.telegraph.co.uk/business/20 ... -ftse-100/
https://www.theguardian.com/business/li ... iness-live

anon155742
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Re: Is rising inflation looming?

#319761

Postby anon155742 » June 19th, 2020, 1:32 pm

https://www.dailymail.co.uk/money/pensi ... falls.html

It looks like the triple lock pension will have to be abandoned

Alaric
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Re: Is rising inflation looming?

#319762

Postby Alaric » June 19th, 2020, 1:36 pm

anon155742 wrote:It looks like the triple lock pension will have to be abandoned


There's a likely statistical anomaly because Average Earnings will probably fall this year and recover next. The triple lock would ignore the fall and only be triggered by the rise. Another mehod would be to base the Earnings comparison on a two year or more period.

tjh290633
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Re: Is rising inflation looming?

#319882

Postby tjh290633 » June 19th, 2020, 8:27 pm

Alaric wrote:
anon155742 wrote:It looks like the triple lock pension will have to be abandoned


There's a likely statistical anomaly because Average Earnings will probably fall this year and recover next. The triple lock would ignore the fall and only be triggered by the rise. Another mehod would be to base the Earnings comparison on a two year or more period.

That is not how it has worked in the past. The pensions remained the same with a fall in the relevant index, and increased when that index rose above the previous maximum. That is certainly what happened with my annuity in 2009, which is an LPI type.

TJH

ursaminortaur
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Re: Is rising inflation looming?

#319973

Postby ursaminortaur » June 20th, 2020, 11:06 am

tjh290633 wrote:
Alaric wrote:
anon155742 wrote:It looks like the triple lock pension will have to be abandoned


There's a likely statistical anomaly because Average Earnings will probably fall this year and recover next. The triple lock would ignore the fall and only be triggered by the rise. Another mehod would be to base the Earnings comparison on a two year or more period.

That is not how it has worked in the past. The pensions remained the same with a fall in the relevant index, and increased when that index rose above the previous maximum. That is certainly what happened with my annuity in 2009, which is an LPI type.

TJH


The problem is just with the state pension triple lock. You are correct that with an indexed annuity if the index falls you would either receive a cut in income or in many cases the contract you have will mean that you will just not receive any increase. With the triple lock though there is a guaranteed 2.5% increase even if both CPI and earnings are below that figure. Then next year if there is a recovery in earnings pensioners will then receive that increase despite not having suffered the fall. The problem is that they are treating the furlough amount as earnings rather than it being treated as a government grant of 80% of the person's earnings when calculating the figures for the annual increase in earnings.

TheMotorcycleBoy
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Re: Is rising inflation looming?

#320368

Postby TheMotorcycleBoy » June 22nd, 2020, 8:15 am

I've not fully parsed this as yet

https://uk.reuters.com/article/uk-healt ... KKBN23S09C

but the source is reuters, which is usually sane.

ursaminortaur
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Re: Is rising inflation looming?

#320404

Postby ursaminortaur » June 22nd, 2020, 10:53 am

TheMotorcycleBoy wrote:I've not fully parsed this as yet

https://uk.reuters.com/article/uk-healt ... KKBN23S09C

but the source is reuters, which is usually sane.


Even the goldbug there thinks it will 3-5 years before the inflation dog starts barking.

So if inflation really is, as the IMF put it in 2013, “the dog that didn’t bark”, failing to respond to all the central bank money-printing unleashed in the wake of the 2008-9 crisis, why should investors prepare for it now, especially as demographics and technology are also conspiring to tamp down inflation across the developed world?

The answer is that some think the dog really will bark this time, partly because - unlike in the post-2008 years - governments around the world have also been rolling out massive spending packages, in a bid to limit the impact of the coronavirus pandemic.

“We will be pushing, pushing, pushing on the string and dropping our guard, then 3-5 years from now...that’s when the (inflation) dog will start barking,” said PineBridge Investments’ head of multi-asset Mike Kelly, who has been buying gold on that view.

dealtn
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Re: Is rising inflation looming?

#334276

Postby dealtn » August 19th, 2020, 8:48 am

Latest set of numbers higher than expected.

https://www.bbc.co.uk/news/business-53831815

The number of "unavailable numbers" has fallen to 12 (from 90 to 74 to 67), so we are at a point I would say where the number is meaningfully accurate once more. So some of that rise could be due to the more accurate measurement that wasn't available in previous months, or it could be a genuine jump. Whether this marks the start of a trend, following the extraordinary liquidity added to the market or not we don't yet know, and that will of course be interesting to discover.

With furlough type schemes unwinding there will likely be less consumer demand, but the offset is increasing demand from all those "forced savers" benefitting from accumulating funds from wages (furlough or not) that had few outlets for spending as society "locked down", that are now less restricted in their consumption with lockdown unwinding.


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