BOE 3rd November Rate Announcement
Discussion
OoopsVoss said:
maybe they are thinking something more nuts like cut-pause-cut, but I wouldn't rule out the possibility.
Why do you think that’s nuts? There will be real concerns about overshooting, and without a specific trigger event, a slower more progressive approach seems more likely. These are the same fools who said transitory for a year and then once it was too late they started to act.
They also enabled the whole debacle initially with excess covid QE.
On top of the decade of QE to that point.
They’re the last people to listen to on this matter
Time and time again they show they’ve no idea…
They also enabled the whole debacle initially with excess covid QE.
On top of the decade of QE to that point.
They’re the last people to listen to on this matter
Time and time again they show they’ve no idea…
Mr Whippy said:
These are the same fools who said transitory for a year and then once it was too late they started to act.
They also enabled the whole debacle initially with excess covid QE.
On top of the decade of QE to that point.
They’re the last people to listen to on this matter
Time and time again they show they’ve no idea…
Melodramatic, much?They also enabled the whole debacle initially with excess covid QE.
On top of the decade of QE to that point.
They’re the last people to listen to on this matter
Time and time again they show they’ve no idea…
The overshoot on QE here is chicken feed when compared to the Fed and ECB. The CBs do act in concert, when they decouple things get interesting.
I'm not advocating if someone jumps in s
t we should follow, but comparatively I'm not sure the BoE is quite the idiots in the room.I'd be asking myself the question - why is the BoE absolutely gung-ho on flattening its sheet Vs the others leisurely pace (aside from the obvious in Euroland as APP and PEPP start to reverse)...
OoopsVoss said:
I'd be asking myself the question - why is the BoE absolutely gung-ho on flattening its sheet Vs the others leisurely pace (aside from the obvious in Euroland as APP and PEPP start to reverse)...
Probably because the BoE has a much longer maturity profile of holdings compared to the others. Certainly the amount of 'natural' rolloff on the Fed balance sheet is much greater than the BoE and I think (not sure but lazy to check) the same applies on the ECB as compared to the BoE which was effectively forced into funding a lot of long dated government issuance, the other central banks have relatively much greater holdings of 1-5 year bonds.xeny said:
OoopsVoss said:
I'd be asking myself the question - why is the BoE absolutely gung-ho on flattening its sheet Vs the others leisurely pace
They anticipate having to do some more in the foreseeable future?Whilst Bailey is divisive and less said the better about his FCA tenure, I have this nagging thought he might have figured something about CBs.
The more heavy lifting the CB does in the economy, the more the politicians get a pass (or get lazy). Getting he Central bank to do all the stimulus, means fiscal competency goes out the window - which is something that ALL Central bankers bang on about.
And the other fairly major benefit of getting rid of the balance sheet, the Taxpayer doesn't have to make the BoE whole on losses (so there is a big tax payer incentive for Baileys actions).
isaldiri said:
Probably because the BoE has a much longer maturity profile of holdings compared to the others. Certainly the amount of 'natural' rolloff on the Fed balance sheet is much greater than the BoE and I think (not sure but lazy to check) the same applies on the ECB as compared to the BoE which was effectively forced into funding a lot of long dated government issuance, the other central banks have relatively much greater holdings of 1-5 year bonds.
The maturity profile is long so is doing sales -but that shorter majority profile is a big problem when you are Italy, who have EUR100bn+ you have to roll in the next 5 months. Once you pull CB support, you start to feel market pricing at full freight. The more debt you need the market to support, the more it costs (so you have France decoupling Germany).As per early post, it could be part of the BoE thinking is to get the UK economy off excessive Monetary crack; intervening ONLY when necessary (which might be more frequent given the recent history of political s
t).OoopsVoss said:
And the other fairly major benefit of getting rid of the balance sheet, the Taxpayer doesn't have to make the BoE whole on losses (so there is a big tax payer incentive for Baileys actions).
The APF has to be made whole on losses realised by selling down the balance sheet as no one is buying at par? The only real difference is realising that loss now rather than potentially less over time as yield differentials may (or may not) close.OoopsVoss said:
The maturity profile is long so is doing sales -but that shorter majority profile is a big problem when you are Italy, who have EUR100bn+ you have to roll in the next 5 months. Once you pull CB support, you start to feel market pricing at full freight. The more debt you need the market to support, the more it costs (so you have France decoupling Germany).
As per early post, it could be part of the BoE thinking is to get the UK economy off excessive Monetary crack; intervening ONLY when necessary (which might be more frequent given the recent history of political st).
Well it offers some flex in the system as the central bank can choose to reinvest redemptions if they want. with longer dated stuff you're only ever going to be able to get rid by selling down and imo anyway market pricing is much more influenced by active sales than redemptions of existing holdings. As per early post, it could be part of the BoE thinking is to get the UK economy off excessive Monetary crack; intervening ONLY when necessary (which might be more frequent given the recent history of political s
t).Suspect you might be a bit optimistic in thinking that the politicians can be weaned off CB support to. It's too useful an excuse for them to use and there's always the option of simply putting in place a compliant head/committee....
isaldiri said:
Well it offers some flex in the system as the central bank can choose to reinvest redemptions if they want. with longer dated stuff you're only ever going to be able to get rid by selling down and imo anyway market pricing is much more influenced by active sales than redemptions of existing holdings.
Suspect you might be a bit optimistic in thinking that the politicians can be weaned off CB support to. It's too useful an excuse for them to use and there's always the option of simply putting in place a compliant head/committee....
The impact of sales is definitely showing up in SONIA short dates.Suspect you might be a bit optimistic in thinking that the politicians can be weaned off CB support to. It's too useful an excuse for them to use and there's always the option of simply putting in place a compliant head/committee....
As for the final point. True, but that doesn't mean there is messaging in the actions (and it's exactly what every Central Banker has been on about since 2015).
Panamax said:
UK had to start hiking from something like 0.75% when the Fed was already sitting at 2.3% so I wouldn't congratulate BoE on its remarkable prudence and foresight in starting to increase rates just a few weeks before the Fed.
The relative rate increases in UK from 2020 are huge.
US rates went up 100%
UK rates went up a staggering 500%!
I really suggest you go and have a look at what actually happened at the end of 2021/early 2022 before quoting completely incorrect numbers.....The relative rate increases in UK from 2020 are huge.
US rates went up 100%
UK rates went up a staggering 500%!
Panamax said:
Although, as the graph shows, US interest rates only dropped to the floor just before BoE started hiking.
Facts, statistics and damned lies.
Err facts? Facts, statistics and damned lies.
The Fed was cutting rates from 2019. The Fed then had to cut 150bps in March 2020 (twice in 2 weeks) due to Covid..... a global pandemic.... the BoE cut 60bps.
Factually, the BoE (in response to post Covid inflation spike) hiked 3months before the Fed in Dec 2021. Fed range was 0-0.25% BoE from 0.1%. The BoE I think (IIRC) did 2 hikes pre the Fed getting into gear.
There is also the inconvenient issue of differing stimulus programmes from Furlough here to student loan forgiveness in the US. Unfortunately it's a lot more complex than whatever passes for content in NPE (although I do enjoy some of the outlandish content in there).
We can all have subjective opinions on C central Banker performance, but sometimes the historical data doesn't support the views. Sometimes.
Edited by OoopsVoss on Saturday 11th May 15:28
Panamax said:
Well, here we are today with a 25 basis point cut from the European Central Bank.
For those who don't want jargon that's a cut of 0.25%
The rate cut that wasn't a surprise to anyone, anywhere?For those who don't want jargon that's a cut of 0.25%
Regardless that inflation in the Eurozone looks stickier and US like for last mile cuts, there has been no doubt on this cut for months given the Tangerine Supremo has being guaranteeing it.
The debate is whether than can do 3 this year given inflation persistence.
BoE is far more interesting, June is a knife edge.
Panamax said:
20:20 hindsight.
What are your predictions for Fed and BOE?
To be fair, he's right in that the market has been pricing a cut at today's meeting as a near certainty for several weeks now.What are your predictions for Fed and BOE?
I'm interested in why June is a knife edge for the BoE though, as current pricing per Bloomberg implies only 8% probability of a cut (and 3% for the Fed).
(Disclaimer: I'm an equity guy and don't follow macro particularly closely, so I don't pay much attention to what the CBs themselves say at meetings)
Edited by NowWatchThisDrive on Thursday 6th June 20:33
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