Interest rates going up soon...
Discussion
Carney just talked himself into a corner. Dropping rates just after Brexit will be seen, in future years, as a catastrophic error. Left him with nowhere to go. In relation to the posts above, a rational analysis is irrelevant. Somebody said 'a raise is not a trend' - true, but that's not the point. An asset bubble is driven by sentiment. It is the perception that we are in an era of rising rates that is the issue. The actual reality is of no importance whatsoever.
W124 said:
Carney just talked himself into a corner. Dropping rates just after Brexit will be seen, in future years, as a catastrophic error. Left him with nowhere to go. In relation to the posts above, a rational analysis is irrelevant. Somebody said 'a raise is not a trend' - true, but that's not the point. An asset bubble is driven by sentiment. It is the perception that we are in an era of rising rates that is the issue. The actual reality is of no importance whatsoever.
What asset bubble should the BOE be concerned about? And is it such a risk the negative impact of an interest rate rises are worth it to deflate this bubble?W124 said:
Houses.
So you'd like to drive down the price of houses by raising interests to a level people can't afford to borrow as much? You don't think that would also lead to a recession and kill any limp signs of growth in the economy? Rather than trying to smash demand it might be better to increase supply.
btdk5 said:
Puggit said:
So every time the BoE has held rates steady, the pound has sunk. Now the rate has gone up, the pound has sunk.
Can someone please explain?
The effect on sterling had already been priced in over the previous week or so as analysts had pretty much confirmed it was going to happen. Can someone please explain?
The announcement from the Bank of England makes it look remote they will do anything further for some time.
So disappointing news in terms of sterling pricing.
For the last few months he has been suggesting a continual rate hike over a few steps, what he has actually done is pushed the time for the next hikes much further down the road, so the £ has slumped.
What he also did in his statement was talk down the future economy and used that as a reason for not keeping to his previous rate hike plans, he has basically made a dire prediction on the Brexit negotiations, he has basically told the markets there will be no deal and that will impact on UK GDP, that's why it dropped by so much compared to what you would expect even with the slowdown on rate hikes compared to what he had previously suggested.
I bet the government will not be happy with his handling of this, more so in his language, which is what is driving the market, the rate change isn't the story.
superkartracer said:
Be interesting to see the effect on spending just before Christmas , people will now hold onto their £ with the fear of more rises to come . So that tiny growth will move into a recession.
Great fking news ?
You really think the average joe will stop spending over 0.25%? Nobody is really going to notice this in a month and a half when Christmas hits. Great fking news ?
Edited by superkartracer on Thursday 2nd November 13:29
Fittster said:
W124 said:
Houses.
So you'd like to drive down the price of houses by raising interests to a level people can't afford to borrow as much? You don't think that would also lead to a recession and kill any limp signs of growth in the economy? Rather than trying to smash demand it might be better to increase supply.
Fittster said:
So you'd like to drive down the price of houses by raising interests to a level people can't afford to borrow as much? You don't think that would also lead to a recession and kill any limp signs of growth in the economy?
Rather than trying to smash demand it might be better to increase supply.
For a few years now there has been this idiotic concept that the correlation of rates and economic growth, for what should be obvious reasons, means that increasing rates will boost the economy; because everyone will be better off earning 20 quid of interest a month despite losing their jobs in a self induced recession... or something. It doesn't make any economic sense at all.Rather than trying to smash demand it might be better to increase supply.
BoRED S2upid said:
superkartracer said:
Be interesting to see the effect on spending just before Christmas , people will now hold onto their £ with the fear of more rises to come . So that tiny growth will move into a recession.
Great fking news ?
You really think the average joe will stop spending over 0.25%? Nobody is really going to notice this in a month and a half when Christmas hits. Great fking news ?
Edited by superkartracer on Thursday 2nd November 13:29
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