UK BoE next rates move
Discussion
So currently at 4.5% what is the expectation I'm guessing a 0.5% move next Thursday.
Does anyone think they would seriously cut it by the full 1%? or might they go for a 0.75% rate cut?
Does anyone think they might go for a very deep cut of 2% or is that just far too much in one step/leave them with nothing to play with a la Japan.
Does anyone think they would seriously cut it by the full 1%? or might they go for a 0.75% rate cut?
Does anyone think they might go for a very deep cut of 2% or is that just far too much in one step/leave them with nothing to play with a la Japan.
THe boy Blanchflower has been making noise again. Do bear inmiond that he's a labour appointment and has voted pretty consistently for rate cuts for a while. We think he has a base rate tracker mortgage.
said:
The Monetary Policy Committee (MPC) must be more aggressive in cutting interest rates, a committee member has warned.
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In a speech in Kent yesterday (29 October), MPC committee member, David Blachflower, said more needs to be done to prevent the UK entering recession and "the MPC needs to be more aggressive in cutting interest rates."
He also hinted that interest rate cuts would be likely by saying that "the remit of the Bank of England is sufficiently flexible."
"My view remains that interest rates do need to come down significantly – and quickly.
"If rates are not cut aggressively we do face the prospect of a relatively deep and long-lasting recession," he said.
According to Blanchflower, the recent credit problems to hit countries across the globe, may prove worse than the crash of 1929.
"Monetary policy makers are now faced with an international financial problem that is unusually severe.
"It is even possible that this event may turn out to be more significant than the 1929 crash which principally involved bank failures in the United States," he warned.
"My concern is that inflation will be below 1 per cent and maybe even negative and the MPC will then be writing letters on the low side, which is not a healthy prospect. In summary, I believe interest rates should be reduced," he added.
His comments tally with those made by chancellor, Alistair Darling last night at his annual Mais lecture.
He hinted that the Bank of England is free to cut interest rates without fear of breaching the government’s inflation target.
Yesterday, the The Federal Open Market Committee took the decision to cut interest rates by 50 basis points to 1 per cent.
In the UK, the MPC will meet next week to make a decision on interest rates. Currently the bank Base Rate is 4.5 per cent.
Meanwhile, Blanchflower also said he expects unemployment in the UK to continue, with more than two million people being out of work by Christmas as the availability of credit restricts job creation.
"The danger is that firms will close and redundancies will rise," he added.
Advertising
In a speech in Kent yesterday (29 October), MPC committee member, David Blachflower, said more needs to be done to prevent the UK entering recession and "the MPC needs to be more aggressive in cutting interest rates."
He also hinted that interest rate cuts would be likely by saying that "the remit of the Bank of England is sufficiently flexible."
"My view remains that interest rates do need to come down significantly – and quickly.
"If rates are not cut aggressively we do face the prospect of a relatively deep and long-lasting recession," he said.
According to Blanchflower, the recent credit problems to hit countries across the globe, may prove worse than the crash of 1929.
"Monetary policy makers are now faced with an international financial problem that is unusually severe.
"It is even possible that this event may turn out to be more significant than the 1929 crash which principally involved bank failures in the United States," he warned.
"My concern is that inflation will be below 1 per cent and maybe even negative and the MPC will then be writing letters on the low side, which is not a healthy prospect. In summary, I believe interest rates should be reduced," he added.
His comments tally with those made by chancellor, Alistair Darling last night at his annual Mais lecture.
He hinted that the Bank of England is free to cut interest rates without fear of breaching the government’s inflation target.
Yesterday, the The Federal Open Market Committee took the decision to cut interest rates by 50 basis points to 1 per cent.
In the UK, the MPC will meet next week to make a decision on interest rates. Currently the bank Base Rate is 4.5 per cent.
Meanwhile, Blanchflower also said he expects unemployment in the UK to continue, with more than two million people being out of work by Christmas as the availability of credit restricts job creation.
"The danger is that firms will close and redundancies will rise," he added.
Listened last night on R2 business brief with Foxy, and there was a question about could the US put rates to 0% and what that would mean for different people.
Basically it would slam in a nail to those who are savers who have already been smashed by the equity & then the pension funds would take a battering but clearly those with mortgages would be really better off.
However there was a note that even if rates were cut & LIBOR fell banks may/probably will maintain a far higher margin over base rate to start to recoup all of their losses.
Basically it would slam in a nail to those who are savers who have already been smashed by the equity & then the pension funds would take a battering but clearly those with mortgages would be really better off.
However there was a note that even if rates were cut & LIBOR fell banks may/probably will maintain a far higher margin over base rate to start to recoup all of their losses.
rich1231 said:
Fittster said:
The annual rate of UK inflation hits a 16-year high of 5.2% and people are talking of a rate cut.
If you think inflation is still anywhere near 5.2% you are on drugs.However the interest rate to counter current inflation was set 2 years ago. Oil prices have dropped to $65 a barrel petrol reduced from £1.219/ltr to £0.899/ltr food is coming down in price, very good crop yeilds wheat/corn/ rice etc
The bank look forward so with that data they are expecting inflation to plumet - prices aside they also know that the recession is here/coming which will kill demand and further amplify the deflation.
Whats more important saving the economy or curbing inflation for a year?
Welshbeef said:
rich1231 said:
Fittster said:
The annual rate of UK inflation hits a 16-year high of 5.2% and people are talking of a rate cut.
If you think inflation is still anywhere near 5.2% you are on drugs.However the interest rate to counter current inflation was set 2 years ago. Oil prices have dropped to $65 a barrel petrol reduced from £1.219/ltr to £0.899/ltr food is coming down in price, very good crop yeilds wheat/corn/ rice etc
The bank look forward so with that data they are expecting inflation to plumet - prices aside they also know that the recession is here/coming which will kill demand and further amplify the deflation.
Whats more important saving the economy or curbing inflation for a year?
Fittster said:
The annual rate of UK inflation hits a 16-year high of 5.2% and people are talking of a rate cut.
Inflation measures what has happened over the past 12 months. Interest rates control what is happening in the coming months, hence the 'current' inflation rate is much less relevant than future ones.scotal said:
THe boy Blanchflower has been making noise again. Do bear inmiond that he's a labour appointment and has voted pretty consistently for rate cuts for a while. We think he has a base rate tracker mortgage.
I have some respect for him after he said said:
The Monetary Policy Committee (MPC) must be more aggressive in cutting interest rates, a committee member has warned.
Advertising
In a speech in Kent yesterday (29 October), MPC committee member, David Blachflower, said more needs to be done to prevent the UK entering recession and "the MPC needs to be more aggressive in cutting interest rates."
He also hinted that interest rate cuts would be likely by saying that "the remit of the Bank of England is sufficiently flexible."
"My view remains that interest rates do need to come down significantly – and quickly.
"If rates are not cut aggressively we do face the prospect of a relatively deep and long-lasting recession," he said.
According to Blanchflower, the recent credit problems to hit countries across the globe, may prove worse than the crash of 1929.
"Monetary policy makers are now faced with an international financial problem that is unusually severe.
"It is even possible that this event may turn out to be more significant than the 1929 crash which principally involved bank failures in the United States," he warned.
"My concern is that inflation will be below 1 per cent and maybe even negative and the MPC will then be writing letters on the low side, which is not a healthy prospect. In summary, I believe interest rates should be reduced," he added.
His comments tally with those made by chancellor, Alistair Darling last night at his annual Mais lecture.
He hinted that the Bank of England is free to cut interest rates without fear of breaching the government’s inflation target.
Yesterday, the The Federal Open Market Committee took the decision to cut interest rates by 50 basis points to 1 per cent.
In the UK, the MPC will meet next week to make a decision on interest rates. Currently the bank Base Rate is 4.5 per cent.
Meanwhile, Blanchflower also said he expects unemployment in the UK to continue, with more than two million people being out of work by Christmas as the availability of credit restricts job creation.
"The danger is that firms will close and redundancies will rise," he added.
Advertising
In a speech in Kent yesterday (29 October), MPC committee member, David Blachflower, said more needs to be done to prevent the UK entering recession and "the MPC needs to be more aggressive in cutting interest rates."
He also hinted that interest rate cuts would be likely by saying that "the remit of the Bank of England is sufficiently flexible."
"My view remains that interest rates do need to come down significantly – and quickly.
"If rates are not cut aggressively we do face the prospect of a relatively deep and long-lasting recession," he said.
According to Blanchflower, the recent credit problems to hit countries across the globe, may prove worse than the crash of 1929.
"Monetary policy makers are now faced with an international financial problem that is unusually severe.
"It is even possible that this event may turn out to be more significant than the 1929 crash which principally involved bank failures in the United States," he warned.
"My concern is that inflation will be below 1 per cent and maybe even negative and the MPC will then be writing letters on the low side, which is not a healthy prospect. In summary, I believe interest rates should be reduced," he added.
His comments tally with those made by chancellor, Alistair Darling last night at his annual Mais lecture.
He hinted that the Bank of England is free to cut interest rates without fear of breaching the government’s inflation target.
Yesterday, the The Federal Open Market Committee took the decision to cut interest rates by 50 basis points to 1 per cent.
In the UK, the MPC will meet next week to make a decision on interest rates. Currently the bank Base Rate is 4.5 per cent.
Meanwhile, Blanchflower also said he expects unemployment in the UK to continue, with more than two million people being out of work by Christmas as the availability of credit restricts job creation.
"The danger is that firms will close and redundancies will rise," he added.
"Mr Blanchflower said: "The UK is obviously especially exposed to the financial turmoil because of our dependency on the financial sector, and because the run-up in house prices and debt levels was even greater here than in the United States."
http://news.sky.com/skynews/Home/Politics/Recessio...
Welshbeef said:
rich1231 said:
Fittster said:
The annual rate of UK inflation hits a 16-year high of 5.2% and people are talking of a rate cut.
If you think inflation is still anywhere near 5.2% you are on drugs.However the interest rate to counter current inflation was set 2 years ago. Oil prices have dropped to $65 a barrel petrol reduced from £1.219/ltr to £0.899/ltr food is coming down in price, very good crop yeilds wheat/corn/ rice etc
The bank look forward so with that data they are expecting inflation to plumet - prices aside they also know that the recession is here/coming which will kill demand and further amplify the deflation.
Whats more important saving the economy or curbing inflation for a year?
NoelWatson said:
I have some respect for him after he said
"Mr Blanchflower said: "The UK is obviously especially exposed to the financial turmoil because of our dependency on the financial sector, and because the run-up in house prices and debt levels was even greater here than in the United States."
http://news.sky.com/skynews/Home/Politics/Recessio...
Its funny, he's been seen as hopelessly out of touch when the banks aim has been to combat inflation. He's now seen as a bit brighter than that. "Mr Blanchflower said: "The UK is obviously especially exposed to the financial turmoil because of our dependency on the financial sector, and because the run-up in house prices and debt levels was even greater here than in the United States."
http://news.sky.com/skynews/Home/Politics/Recessio...
One of the rags was aiming at the MPC hawk the other day.... apparently being a professor of economics isnt a reason to pretend you know what you are talking about.....
Fittster said:
Welshbeef said:
rich1231 said:
Fittster said:
The annual rate of UK inflation hits a 16-year high of 5.2% and people are talking of a rate cut.
If you think inflation is still anywhere near 5.2% you are on drugs.However the interest rate to counter current inflation was set 2 years ago. Oil prices have dropped to $65 a barrel petrol reduced from £1.219/ltr to £0.899/ltr food is coming down in price, very good crop yeilds wheat/corn/ rice etc
The bank look forward so with that data they are expecting inflation to plumet - prices aside they also know that the recession is here/coming which will kill demand and further amplify the deflation.
Whats more important saving the economy or curbing inflation for a year?
50bp is priced into the market, there will be disappointment if they don't meet expectations......agree this is dangerous and containing inflation will likely be a problem at some point,,,right now it is more important to keep the engine running on all cylinders so that it doesn't conk out.
ECB also expected to cut next Thursday and unbelievably the Japanese also to reduce below the current 0.5% rate!
These rate cuts normally take 6mth-12mths to have any real effect on the economy, e.g the £20 you save on your mortgage from rate cut trackers will only go on heating, so not likely to spend much more on the real economy..
Fed cut was expected, there should be a month end rally in stocks on portfolio rebalancing, saw 10% dow improvement the day before fed cut, partly on rebalance and expectation,,,after the cut, Dow closed slightly down yesterday, if they had not cut it would have fallen heavily.....The point with this is, when BofE cuts 50bp,,,don't expect much from the markets or improvement in the economy for a while yet.
ECB also expected to cut next Thursday and unbelievably the Japanese also to reduce below the current 0.5% rate!
These rate cuts normally take 6mth-12mths to have any real effect on the economy, e.g the £20 you save on your mortgage from rate cut trackers will only go on heating, so not likely to spend much more on the real economy..
Fed cut was expected, there should be a month end rally in stocks on portfolio rebalancing, saw 10% dow improvement the day before fed cut, partly on rebalance and expectation,,,after the cut, Dow closed slightly down yesterday, if they had not cut it would have fallen heavily.....The point with this is, when BofE cuts 50bp,,,don't expect much from the markets or improvement in the economy for a while yet.
I don't buy the idea of inflation being a problem. It's a lagging indicator and has been pushed up by the unpredicable fuel price fluctuations, in my opinion. Any retailer increasing their prices right now, needs their head looking at. So, for me, inflation less like a problem.
The BoE and the ECB need to get ahead of the curve, and not be reacting to events, which is what they are now doing. A big rate cut would normally induce panic, but I think we're all panicked-out by now, so I'd like to see a 1% cut. I don't beleive this will induce a spending spree, 'cos I think we're all scared about losing our jobs/companies, but I would hope it would allow a soft(er) landing.
You can always nudge the rates back up again rapidly enough as the economies start to recover.
The BoE and the ECB need to get ahead of the curve, and not be reacting to events, which is what they are now doing. A big rate cut would normally induce panic, but I think we're all panicked-out by now, so I'd like to see a 1% cut. I don't beleive this will induce a spending spree, 'cos I think we're all scared about losing our jobs/companies, but I would hope it would allow a soft(er) landing.
You can always nudge the rates back up again rapidly enough as the economies start to recover.
NoelWatson said:
Welshbeef said:
rich1231 said:
Fittster said:
The annual rate of UK inflation hits a 16-year high of 5.2% and people are talking of a rate cut.
If you think inflation is still anywhere near 5.2% you are on drugs.However the interest rate to counter current inflation was set 2 years ago. Oil prices have dropped to $65 a barrel petrol reduced from £1.219/ltr to £0.899/ltr food is coming down in price, very good crop yeilds wheat/corn/ rice etc
The bank look forward so with that data they are expecting inflation to plumet - prices aside they also know that the recession is here/coming which will kill demand and further amplify the deflation.
Whats more important saving the economy or curbing inflation for a year?
With unemployment heading for early eighties numbers, somehow I dont think inflation is going to be the major problem.
BOR said:
I don't buy the idea of inflation being a problem. It's a lagging indicator and has been pushed up by the unpredicable fuel price fluctuations, in my opinion. Any retailer increasing their prices right now, needs their head looking at. So, for me, inflation less like a problem.
The BoE and the ECB need to get ahead of the curve, and not be reacting to events, which is what they are now doing. A big rate cut would normally induce panic, but I think we're all panicked-out by now, so I'd like to see a 1% cut. I don't beleive this will induce a spending spree, 'cos I think we're all scared about losing our jobs/companies, but I would hope it would allow a soft(er) landing.
You can always nudge the rates back up again rapidly enough as the economies start to recover.
Completely agree, except I would take it down to 3% now. It can always go back up if the indications change.The BoE and the ECB need to get ahead of the curve, and not be reacting to events, which is what they are now doing. A big rate cut would normally induce panic, but I think we're all panicked-out by now, so I'd like to see a 1% cut. I don't beleive this will induce a spending spree, 'cos I think we're all scared about losing our jobs/companies, but I would hope it would allow a soft(er) landing.
You can always nudge the rates back up again rapidly enough as the economies start to recover.
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