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Interest Rates Won't Rise Yet, Says Bank Of England Policymaker

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http://www.telegraph.co.uk/finance/economics/interestrates/7893211/Interest-rates-wont-rise-yet-says-Bank-of-England-policymaker.html

Mr Miles, who is a member of the central bank's Monetary Policy Committee (MPC), gave a clear indication that he would not vote for a rate rise any time soon, despite the fact that fellow committee member Andrew Sentance did so at the June meeting.

"I look forward to the day when it will be appropriate to tighten monetary policy since a return to more normal levels of interest rates would be a welcome sign that economic conditions were also more normal. But I do not think that is where we are today," Mr Miles said in a speech in Bristol.

He said that although he may sound "blasé" about inflationary risks, he believed that underlying price pressures were "not strong". Inflation is currently 3.2pc and has been persistently above the 2pc target and higher than expected in recent months, prompting Mr Sentance's decision to vote for a rate rise. However, he was the sole member of the nine-member committee to do so. Interest rates have been at the historic low of 0.5pc since March 2009.

Mr Miles said that his view on inflation was linked to wage rises, which have remained low during the downturn. "Without a pick up in wage inflation I find it hard to think it at all likely that inflation being significantly above target is sustainable."

He has been considered one of the more dovish members of the MPC since he joined in June last year, in favour of looser monetary policy, after he voted for a larger extension in quantitative easing than his fellow members when the target was raised to £200bn in November.

"He is unlikely to be the marginal voter in the move to tighter policy. Indeed, his strong defence of the current policy stance, together with his emphasis on downside risks, suggests disagreements on the MPC are likely to persist for some time," said Simon Hayes, economist at Barclays Capital.

Mr Miles said that if banks do come to hold more capital, the job of setting monetary policy would be easier because it would reduce the chances of banking crises.

Isn't Miles one of Browns stooges?

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So miles says no, sentance says yes. That makes it one all. It's what the other six think that counts now.

Edit: brain faster than fingers.

Edited by Pent Up

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Seems we have a few months to wait until a rise in IR, but I would suggest that one or two high inflation statistics coming in could change that very quickly. Not convinced that's going to happen though - the BoE at least think they have inflation under firm control.

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but, but, I thought we were in recovery and had been for a year or more.........

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all you lot waiting for IR rises are utterly deluded.

but don't worry, cos you'll get your HPC without any IR rises.

Yep. Is there a government stat here in the UK same as capacity utilisation in the US? If so, keep an eye on that for a clue as to when wage inflation may occur. Right now the output gap is too large.

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Yep. Is there a government stat here in the UK same as capacity utilisation in the US? If so, keep an eye on that for a clue as to when wage inflation may occur. Right now the output gap is too large.

wgae inflation will happen quite suddenly when boomers finally retire for good.

then, if all this liquidity is still around, buy a house or gold.

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wgae inflation will happen quite suddenly when boomers finally retire for good.

then, if all this liquidity is still around, buy a house or gold.

The usual generational definition of a baby boomer in the US is up to 1964 so that makes 2029 when they reach retirement age. Don't know if it is different here. If not, that's a lot of deflation ahead of us.

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wgae inflation will happen quite suddenly when boomers finally retire for good.

then, if all this liquidity is still around, buy a house or gold.

jokin? they replace old people with young cheap ones.

most boomers have little money unless they worked in the public sector.

I have no idea where many of you get the idea the world is flooded with hoarded excess wealth.

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Seems we have a few months to wait until a rise in IR, but I would suggest that one or two high inflation statistics coming in could change that very quickly. Not convinced that's going to happen though - the BoE at least think they have inflation under firm control.

Right now the numbers are over 3%.. but being compared to catastrophic lows in early-mid 2009. The trend is down for inflation right now, and I believe will come down under the 2% target as we move into the fall.

However if the inflation does not come down under 2%, and begins trending upwards then the BoE would have no choice but to move to tightening. I'm not sure if they would want to raise rates or unwind some QE first. But either way even stating at a meeting that they are moving to tightening would be enough to take some wind out of inflation.

If the political/fiscal/economy isn't ready for tightening at that point, that is too bad. The BoE has a mandate to keep inflation at about 2% per year.

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all you lot waiting for IR rises are utterly deluded.

but don't worry, cos you'll get your HPC without any IR rises.

Agree, don't see any sentiment anywhere of significant IR rise in foreseeable future. But HPC anyway? (I wish). How so?

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Agree, don't see any sentiment anywhere of significant IR rise in foreseeable future. But HPC anyway? (I wish). How so?

maybe you havent applied for a loan/mortgage/overdraft recently.

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maybe you havent applied for a loan/mortgage/overdraft recently.

No. Not likely to either. So I'm not buying, just like many others, because potential sellers won't sell at an affordable price, because they don't have to, because their repayments are so low, bacause of low interest rates. Which aren't going to increase any time soon.

I still haven't heard anything that trumps that. Wish it were not so.

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No. Not likely to either. So I'm not buying, just like many others, because potential sellers won't sell at an affordable price, because they don't have to, because their repayments are so low, bacause of low interest rates. Which aren't going to increase any time soon.

I still haven't heard anything that trumps that. Wish it were not so.

unemployment amongst the public sector will fix that.

mortgage debt is not the only driver.

Credit cards, car loans, MEW...they all add up for many people.

bankruptcies are running at a very high rate too...already. however, as far as housing is concerned, many houses that shoul be force sold are currently not being so due to extremely generous benefits.....the first recievers of which are very soon to lose out.

It all takes time...crashes dont occur in 10 weeks.

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unemployment amongst the public sector will fix that.

mortgage debt is not the only driver.

Credit cards, car loans, MEW...they all add up for many people.

bankruptcies are running at a very high rate too...already. however, as far as housing is concerned, many houses that shoul be force sold are currently not being so due to extremely generous benefits.....the first recievers of which are very soon to lose out.

It all takes time...crashes dont occur in 10 weeks.

OK, but all of these things have been suggested as reasons for an imminent crash for quite a few years now, apart from the new govt attitude to benefits, which admittedly could be a prime mover. But have to say am not convinced. Property is the sacred cow, inviolate, the prize coveted by everybody, including the movers and shakers who call the shots. I know not everything is in their power to control, but they will be reluctant to see the value of their property portfolios collapsing.

Hope you are right, though. Time will tell.

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http://uk.reuters.com/article/idUKTRE66G0SQ20100717

The Bank of England should start to gradually raise interest rates from their "exceptionally low level" as the economy has begun to recover and inflation is higher than expected, policymaker Andrew Sentance said.

Since being the sole member of the Bank's Monetary Policy Committee to vote for a rise in rates from their current 0.5 percent level in June's policy meeting, Sentance has repeatedly made the case for raising rates.

"The question we are now facing is, with the economy recovering and with the inflation having been higher than we expected, whether we now need to begin to move (rates) upwards again," he told BBC Radio in an interview broadcast on Saturday. "If we can raise interest rates in a gradual way that will be helpful for the recovery because it will mean that there won't be big shocks." Minutes of July's rate setting meeting, due to be released on July 21, are expected to show Sentance remained alone on the committee in voting to raise rates this month.

push_me_pull_you.jpg

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What's the wording of the BOE 2% inflation target?

From past performance you would have to deduce that it says "Whatever happens, don't let inflation fall below 2%"

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http://uk.reuters.com/article/idUKTRE66J4K520100720

Monetary policy can move either way and the June budget will not make a significant difference to Bank of England forecasts, Monetary Policy Committee member Adam Posen was quoted as saying on Tuesday.

In an interview with Dow Jones Newswires, Posen said there was a huge amount of uncertainty surrounding the economic outlook, which meant that the MPC could ultimately raise rock-bottom interest rates or even loosen policy further.

"Either things get worse ... in which case we have to try to act, or they don't get worse, in which case the kind of things that Andrew Sentance has been talking about or Spencer Dale's been talking about are relevant and we tighten," he was quoted as saying.

Fellow MPC member Andrew Sentance surprised markets last month when minutes of policymakers' June meeting showed that he voted for a rate rise from 0.5 percent to 0.75 percent against the rest who backed holding rates steady.

Minutes of the July meeting will be published on Wednesday. Sentance is expected to have repeated his call for higher rates but Posen's comments indicate BoE chief economist Dale may also be leaning that way.

Posen told the newswire that the June budget, the harshest in a generation, would have a slightly greater downward impact in the next 18 months but not by much.

"We have to wait for the October spending review to have it fully in hand, but ... we think (the) contraction will be a little bigger in the next 18 months than we had built into our forecasts," Posen was quoted as saying.

"The difference we're talking about is in tenths of a percent of GDP, not in whole (percentage) points of GDP, and in relatively few tenths of a percent."

Oh Christ they really don't have any idea, this is a clear admission they are guessing.

Either things get worse or they won't. Fooking genius, your well worth the pay your getting.

Still it's contained.

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  • 261 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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