Monday, Jul 30, 2007
A decision to hold rates this week would be a mistake...
MoneyWeek: Why the Bank should hike interest rates this week
The Bank of England may be feeling extremely reluctant to pile on the pressure while the City is feeling so wobbly. But that doesn't mean it shouldn't hike the base rate to 6%, says John Stepek.
Posted by mary @ 11:10 AM (161 views) Add Comment
10 Comments
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1. Pelethar said...
There's absolutely no chance they will put them up this week - they are too afraid of negative press. A journalist was on the radio over the weekend rattling his sabre at the MPC, saying that if they had the temerity to raise rates again the paper would go all out for them and the government, using the plight of flood victims as an excuse - "how can they put our mortgages up now when all our wordly goods have been destroyed" etc.
They will hold at 5.75% for at least two or three more months, I think.
2. mrmickey said...
If you want to know what the BOE are going to do watch Sterling it's starting to weaken which indicates they will hold rates.
3. Scott said...
The BOE will hold. They will not vote a rise straight after another rise. They will rise in September when they are expected to, for being too silly not to raise in August. Slowly but surely folks.
4. paul said...
"If you want to know what the BOE are going to do watch Sterling it's starting to weaken which indicates they will hold rates."
That's not very logical. They would raise rates to tackle a falling currency.
5. mrmickey said...
Paul who said the BOE act logically, the money markets think the BOE are going to hold and are selling Sterling that's the logic.
6. sold 2 rent 1 said...
Sterling is also at the back end of the yen carry trades - see what happened last March when the yen took a tumble.
When the credit crunch comes properly later this autumn, expect sterling to tumble too.
7. sold 2 rent 1 said...
Sorry I meant "see what happened last March when the yen rose sharply".
8. harold said...
For sure, they'll hold - the credit crunch has not yet begun in earnest (IMHO). FX markets giving out mixed signals about sterling at the moment - guess they are not sure about the MPC's sincerity regarding inflation (and who can blame them?).
9. uncle tom said...
The odds are heavily stacked for a 'no change' vote this week.
- September's outcome is much less certain...
10. dobber said...
IMHO, the weakening of sterling against the dollar is to do with US investors taking fright and repatriating money back home which was previously invested in sterling based assets (sell UK corporate bonds, buy US Treasury bills). This may be short lived, if the Asians decide the US is at risk and stop buying T bills, then the dollar could get toasted.