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Guest wrongmove

Bank Set On Rate Cut To Revive Economy

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Guest wrongmove

Bank set on rate cut to revive economy

The article is more balanced than the title, but expectations seem to be for a cut. I'm not totally sure - 5/4 last time, but it was the day of the tube bombings.

From the article:

"Mervyn King, the bank's governor, and his colleagues have been surprised by the sharp slowdown in consumer spending over the past six months, and are unlikely to want to disappoint the markets by leaving rates on hold for a 12th successive month.

This is despite a surge in corporate earnings and share prices last week, which saw the FTSE 100 hit a three-year high.

'They've talked themselves into doing it,' said John Butler, HSBC chief UK economist, who sees a 60 per cent chance of a rate cut this week. 'What will probably persuade them to do it in August is that GDP has come in more sluggish than expected.' "

and

"But Butler fears a rate cut could prolong the consumer borrowing binge that has seen total debt hit a trillion pounds. 'You may be supporting growth in the next six months but only by taking it away from next year. I think next year is when you get the aggressive cuts,' he said. "

A hold would be a surprise though, and the BoE don't seem to do surprises.

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'What will probably persuade them to do it in August is that GDP has come in more sluggish than expected.' "

Gee. We reach the end of a debt-created bubble and GDP growth drops as people reduce borrowing: so the solution is to throw more debt into the bubble. Great idea.

A hold would be a surprise though, and the BoE don't seem to do surprises.

It would either be a hold or a cut, I can't see them raising rates right now. I'm guessing hold, it's hard to blame them for doing nothing, whereas a cut or raise would mean they'd have to take responsibility for the consequences.

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I think next year is when you get the aggressive cuts.

Mmmm.....I like the sound of that...... :)

Really? Scares the heebegeebees out of me. More debt, more debt and more debt. Will just make the inevitable correction even worse?

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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