Aug 2022 MPC decision?

[stongle]

What's people's views on the hike coming?

Dovish 0.25%
Medium case 0.5%
st or bust 0.75%

I think it's 0.5%, not only because of real rates BUT they have to recognise they are storing up credit risk for people who shouldn't be invested in it.

0.25% and wishy washy pledge to unwind sheet might be a possibility, just like a 0.75% shot.

Although everyone's doing 0.5% and above these days, Aussies, Fed even the ECB went in hawk(ish).

Thoughts?

Edited by stongle on Tuesday 2nd August 11:56

[Eric Mc]

I haven't a clue what any of that means.

[RogerDodgerSuperTodger]

I would guess 50 as 25 might be seen to be soft and more sluggish than a sluggish thing.

I think it was a 6 to 3 vote last time for 25, with a minority of that wanting 50 - I’d bet 5 of my lazily earned pounds that the minority is becoming a majority.


Could be wrong though!

I saw mortgage affordability has been scrapped / softened too, wonder if that will help nudge their minds.

[moles]

Hopefully .75%

[Simpo Two]

Eric Mc said:

I haven't a clue what any of that means.

Something about mortgages and interest rates I deduce. I'm going for £50 on black and a bacon sandwich.

[stongle]

Simpo Two said:

Eric Mc said:

I haven't a clue what any of that means.

Something about mortgages and interest rates I deduce. I'm going for £50 on black and a bacon sandwich.

Perhaps you should either not reply, or perhaps consider educating yourself on what a Bank of England move means to what is affecting 99.9% of people in the country right now?

It's going to be significant to household budgets, whether that be food, energy, mortgages AND investments.

If the BoE don't deliver to expectation (which appears to be broadly 50bps), inflation risks arguably increase. Not to mention risk in personal investments.... which is absolute base understanding everyone should have....

[tighnamara]

stongle said:

Simpo Two said:

Eric Mc said:

I haven't a clue what any of that means.

Something about mortgages and interest rates I deduce. I'm going for £50 on black and a bacon sandwich.

Perhaps you should either not reply, or perhaps consider educating yourself on what a Bank of England move means to what is affecting 99.9% of people in the country right now?

It's going to be significant to household budgets, whether that be food, energy, mortgages AND investments.

If the BoE don't deliver to expectation (which appears to be broadly 50bps), inflation risks arguably increase. Not to mention risk in personal investments.... which is absolute base understanding everyone should have....

I am sure Simpo knows and understands, (you have taken his comment to seriously)
The initial post is a bit washy if you are a normal person on the street who uses %.
If you want all to have aa basic understanding at least use terminology all are aware of not bps.

Your points are valid and need a 0.5% (50bps) increase.

Edited by tighnamara on Tuesday 2nd August 11:03

[bigpriest]

A quick glance at the Currency Cat - there's a disconcerting 47 degreee slope against the Dollar, Yen and Deutschmark. Slightly fractious in the nines and sevens.

[drmotorsport]

You could always wait and see what they do, rather than see what everyone else crystal ball says

[stongle]

tighnamara said:

I am sure Simpo knows and understands, (you have taken his comment to seriously)
The initial post is a bit washy if you are a normal person on the street who uses %.
If you want all to have aa basic understanding at least use terminology all are aware of not bps.

Your points are valid and need a 0.5% (50bps) increase.

Edited by tighnamara on Tuesday 2nd August 11:03

It wasn't directed @ Simpo; but Eric and his attitude. I don't wander into his aircraft posts (of which I have no knowledge) and start saying its gobbledegook. If it's unclear, ask. Politely.

I fixed the OP for %. FWIW, thinking in basis points should be relevant to anyone who had Fixed Income investments over the last few years, and its become the normal terminology for media / press discussion Central Bank rates. But happy to correct.

This is a very "big" decision for the bank. The BoE hiking trajectory looks to be too shallow, whilst it WILL hit debt burdens (a concern), there are a whole heap of issues out there - some not overtly obvious. The impact the rate hike could have on imported inflation and even that of the stored up / covid release is somewhat questionable - but it's running out of tools. It doesn't have the upper limit's of rates that yesterday year suggest. Simply too much debt in the system.

[Eric Mc]

stongle said:

Simpo Two said:

Eric Mc said:

I haven't a clue what any of that means.

Something about mortgages and interest rates I deduce. I'm going for £50 on black and a bacon sandwich.

Perhaps you should either not reply, or perhaps consider educating yourself on what a Bank of England move means to what is affecting 99.9% of people in the country right now?

It's going to be significant to household budgets, whether that be food, energy, mortgages AND investments.

If the BoE don't deliver to expectation (which appears to be broadly 50bps), inflation risks arguably increase. Not to mention risk in personal investments.... which is absolute base understanding everyone should have....

Just an explanation of the acronyms would have been helpful -

MPC?

BPS?

[abzmike]

Monetary Policy Committee
Basis Points… banker speak for percentages

[Eric Mc]

abzmike said:

Monetary Policy Committee
Basis Points… banker speak for percentages

Thank you.

I knew the the Bank of England were meeting this week regarding their monthly interest rate review. I just didn't have a clue that this is what the OP was talking about.

[vulture1]

I don't know ow why they are bothering. Let every other country of the world raise rates to stop inflation. Then once they are done a few minor rises for us to raise the currency back up.

[tighnamara]

stongle said:

It wasn't directed @ Simpo; but Eric and his attitude. I don't wander into his aircraft posts (of which I have no knowledge) and start saying its gobbledegook. If it's unclear, ask. Politely.

I fixed the OP for %. FWIW, thinking in basis points should be relevant to anyone who had Fixed Income investments over the last few years, and its become the normal terminology for media / press discussion Central Bank rates. But happy to correct.

This is a very "big" decision for the bank. The BoE hiking trajectory looks to be too shallow, whilst it WILL hit debt burdens (a concern), there are a whole heap of issues out there - some not overtly obvious. The impact the rate hike could have on imported inflation and even that of the stored up / covid release is somewhat questionable - but it's running out of tools. It doesn't have the upper limit's of rates that yesterday year suggest. Simply too much debt in the system.

[Panamax]

Eric Mc said:

Just an explanation of the acronyms would have been helpful -

MPC?

BPS?

Ah, but you've missed the point. When you carefully and clearly explain accounting/tax matters on PH you're not setting out to demonstrate your innate superiority by throwing in as much jargon as possible. Without a few basis points, inverted yield curves and a bit of quantitative tightening the monetary/fiscal balance can never be fully appreciated by mere humans.

Regarding the topic, guessing an answer within a few fractions of a percent looks remarkably irrelevant while inflation is raging c.10% and interest rates paid by banks remain stubbornly close to 1%. Negative real interest rate of a staggering -9%

[46and2]

My take is either 0.5 or 0.75%, I think they removed the 3% limit thing for just this reason, so that lending could continue even at higher rates.

To me this suggests the base rate will be going higher tham 3%, how quickly is for BOE to decide.

[Eric Mc]

Panamax said:

Ah, but you've missed the point. When you carefully and clearly explain accounting/tax matters on PH you're not setting out to demonstrate your innate superiority by throwing in as much jargon as possible. Without a few basis points, inverted yield curves and a bit of quantitative tightening the monetary/fiscal balance can never be fully appreciated by mere humans.

Regarding the topic, guessing an answer within a few fractions of a percent looks remarkably irrelevant while inflation is raging c.10% and interest rates paid by banks remain stubbornly close to 1%. Negative real interest rate of a staggering -9%

I am but a mere human myself. It's tough trying to keep up with the intellectual giants and super achievers that frequent these hallowed halls. I know I am merely tolerated here sometimes.

[stongle]

46and2 said:

My take is either 0.5 or 0.75%, I think they removed the 3% limit thing for just this reason, so that lending could continue even at higher rates.

To me this suggests the base rate will be going higher tham 3%, how quickly is for BOE to decide.

The expectations is for base rate to be higher than 3%, we might hit a 3.5% peak. I'm looking to see if anyone has a perspective on how the MPC may vote. Or how it splits. When the Federal Reserve hiked 2 weeks ago - they tried to keep the discussion on inflation NOT recession. If the BoE is very hawkish, its an interesting departure from recent behaviour.

As for the questionable manners of a couple of posters, basis points is common vernacular. Todays media:

https://www.reuters.com/markets/rates-bonds/austra...

Or if you can't be bothered to click -

"SYDNEY, Aug 2 (Reuters) - Australia's central bank on Tuesday raised interest rates for a fourth month running, but tempered guidance on further hikes as it forecast faster inflation but also a slowdown in the economy.

Wrapping up its August policy meeting, the Reserve Bank of Australia (RBA) lifted its cash rate by 50 basis points to 1.85%, marking an eye-watering 175 basis points of hikes since May in the most drastic tightening since the early 1990s."

[isaldiri]

stongle said:

The expectations is for base rate to be higher than 3%, we might hit a 3.5% peak. I'm looking to see if anyone has a perspective on how the MPC may vote. Or how it splits. When the Federal Reserve hiked 2 weeks ago - they tried to keep the discussion on inflation NOT recession. If the BoE is very hawkish, its an interesting departure from recent behaviour.

Um....not quite. Market expectations currently is for base rates to top out below 3% and to start falling after mid next year a long way below 3.5%...