Wednesday, Aug 04, 2010
Now that would put the cat amongst the pigeons
Daily Telegraph: Interest rates will go up quicker than anyone expects, ex-Bank of England officials warn
Sit back, open popcorn and watch. The smart money has to be on "wait and see"
Posted by growler @ 07:20 AM (1378 views) Add Comment
8 Comments
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1. mrflibble said...
This must be the 15th warning we've had about the base rate rising but there it sits, still at a 300 year low of 0.5%.
It's like watching paint dry. Same can be said for the housing market.
2. paul said...
Okay so interest rate decision due tomorrow.
Let's look at the form card this time round. Well, we've had a senior Bank official warn about inflation two weeks ago (the diametrically furthest point from the rate decision) and this week we've had the usual 'double-dip' alarm stories to bring the 'keep rates as they are' case forward.
Mervyn King stepped forward to put the case forward for leaving rates unchanged (despite well over-target inflation) so now we have two similarly important former Bank officials to wheel out the case for raising rates - just for balance.
It is funny how Bank officials only make the case for raising rates after they are employed by the Bank of England.
Now with the Halifax index at 0.6% for July, we should see rates raised.
Just kidding! They'll keep them as they are - the recovery has to be locked in, see?
3. Cynicalactuary said...
I think the clue is in the word "ex-Bank". King says otherwise - and I don't think even he would criminally stupid enough deliberately to lull borrowers with a false sense of security and then shoot them down.
I suspect they've basically abandoned the inflation target - at least the upside risk - to the greatest extent they think the market will let them get away with, and so far the market is playing along.
4. str 2007 said...
What, Halifax up 0.6 for July! I missed that. As you say they quickly become ex members when they get interest rate rise ideas.
I think they'll stay low for a while, but the next article pored above is worth reading
5. str 2007 said...
Sorry posted above.
6. timmy t said...
From the article: “I am expecting a recovery – when that is strongly established I’d expect rates to start rising faster than the market currently expects. I wouldn’t be at all surprised to see interest rates at 2.5pc a year from now.”
If the only basis for expecting a quick rise is an expectation that the recovery will be strongly established anytime soon then I don't think there's much to get excited about yet. I wouldn't have thought there was much doubt that rates will rise when that happens - reckon we're in for a long wait before the recovery is anything like strong.
7. str 2007 said...
I said along long time ago on here that maybe they'll re-set rates at a permanently lower level and adjust in 1/8th point movements to show direction but without effect.
Let's see what happens.
Aftyerall banks are showing strong profits again and they won't want to jeopordize bonuses.
8. landofconfusion said...
I will be amazed if they raise rates, even by 0.125%. With M3 collapsing, commercial loan levels falling, the pound rising against the dollar and HPI still below 2007 levels, a rise now would be unfathomable.