Jump to content
House Price Crash Forum
Pent Up

Mpc Member Says Interest Rate Has To Rise

Recommended Posts

http://news.sky.com/skynews/Home/Business/Interest-Rates-Should-Rise-Says-Bank-Of-Englands-Andrew-Sentance/Article/201011415826244?lpos=Business_First_Home_Article_Teaser_Region_1&lid=ARTICLE_15826244_Interest_Rates_Should_Rise_Says_Bank_Of_Englands_Andrew_Sentance

Andrew Sentance, who sits on the Bank's Monetary Policy Committee (MPC), also said that keeping interest rates at record lows for too long could erode confidence in the central bank's 2% inflation target.

"The longer we keep interest rates at an exceptionally low level, the greater is the risk that Bank Rate would need to rise sharply in the future, creating a serious setback to business and consumer confidence," he said.

"We should seek to avoid such a sudden lurch in policy."

Dr Sentance has been calling for a quarter-point increase in interest rates since June.

He is the only MPC member to do so at a time when Britain's recovery has been in doubt due to aggressive fiscal tightening measures.

However he added that there was a risk that forecasters were underestimating the strength of private sector demand, as they did in the 1990s recession.

"There is a risk that we are making the same mistake again because of the preoccupation with downside risks following the financial crisis," he said.

The Bank of England base rate has remained at 0.5% since March 2009, while inflation has been running above target all year and looks set to stay raised until the end of 2011.

Share this post


Link to post
Share on other sites

Look he's in cloud cuckoo land. If we raise interest rates, John Q Tracker Mortgage will default which would result in a fall in value of his over inflated asset. If this happens on a large scale the dead will rise from the grave, the seas will boil and the sky will fall. We just can't have that. <_<

Share this post


Link to post
Share on other sites

It's a shame really, there's a critical mass of idiots at the BoE and his common sense is drowned out.

If he was female, he'd be called Cassandra.

Edited by exiges

Share this post


Link to post
Share on other sites

I hate to say it, but "it really is different this time". There is little comparison with the last recession.

People seemed to cope with increasing rates back then.

No way can some of them cope now!

If BoE base rates start moving to even 1% then mortgages go towards say 6%, then a lot of people will be stuffed. Mainly because they borrowed way beyond their means.

I reckon low rates ~0.5% base for the next 4 years.

Share this post


Link to post
Share on other sites

I hate to say it, but "it really is different this time". There is little comparison with the last recession.

People seemed to cope with increasing rates back then.

No way can some of them cope now!

If BoE base rates start moving to even 1% then mortgages go towards say 6%, then a lot of people will be stuffed. Mainly because they borrowed way beyond their means.

I reckon low rates ~0.5% base for the next 4 years.

I very much doubt that.

Share this post


Link to post
Share on other sites

They are caught between a rock and a hard place.

Interest rate policy is completely screwed.

Increase rates they cause a massive default, keep them too low savers, pensions get wiped out.

There is no pain free exit from this mess, the counters need resetting to zero the rich are going to have to lose their wealth along with the rest of us.

Share this post


Link to post
Share on other sites

IMO they'd have to be mental to raise rates now. Inflation is manageable, if a bit high. Some inflation erodes the debt, so you get away with what you can without spooking the markets. The cost of borrowing to the government is relatively low. The pound is relatively high against the USD, you don't want it higher or it will choke off exports even more.

You raise rates when you have to, ie when the cost of borrowing goes up, or inflation gets wildly out of control.

The government needs to be more selective about policy than the blunt instrument of rates. It has the ability to prevent bubbles in housing and other areas caused by low rates using sector specific policies rather than global ones.

Rate movements have to be set for the general good of the economy, not for a few people who want cheap houses. What good is a cheap house if you have no job ?

Share this post


Link to post
Share on other sites

They are caught between a rock and a hard place.

Interest rate policy is completely screwed.

Increase rates they cause a massive default, keep them too low savers, pensions get wiped out.

There is no pain free exit from this mess, the counters need resetting to zero the rich are going to have to lose their wealth along with the rest of us.

What about raising them 0.01%?

:)

Share this post


Link to post
Share on other sites

Good cop, bad cop.

Exactly. I was going to post a more elaborate description of his apparent purpose in being on the MPC but that says it.

Share this post


Link to post
Share on other sites

Crikey O Reilly. Have you read the comments underneath? Are these people insane?

This one left me gobsmacked. The worst thing is it was singly the most highly rated comment on that front page :unsure:

It is scary how a "person" like this can even call for any form of interest rate rise. Our economy is barely keeping its head above water thanks in no small part to low interest rates. Keeping them low has kept more families in their homes, people in jobs and encourages consumer spending. With food prices rising, child tax relief being cut, rail fares increasing above inflation, fuel price hikes, against salary cuts etc - how does he expect the public to fund these? It makes my blood boil how someone in such a key role to the economic wellbeing of our nation can call for interest rate rises. I think it says it all Mr Sentance when he is the lone voice of the MPC in calling for rate increases. Get rid of this bufoon and replace him with someone who knows what they are talking about.

Inflation is too high so we need lower interest rates for longer.. you couldn't make it up :rolleyes:

Share this post


Link to post
Share on other sites

IMO they'd have to be mental to raise rates now. Inflation is manageable, if a bit high. Some inflation erodes the debt, so you get away with what you can without spooking the markets. The cost of borrowing to the government is relatively low. The pound is relatively high against the USD, you don't want it higher or it will choke off exports even more.

You raise rates when you have to, ie when the cost of borrowing goes up, or inflation gets wildly out of control.

The government needs to be more selective about policy than the blunt instrument of rates. It has the ability to prevent bubbles in housing and other areas caused by low rates using sector specific policies rather than global ones.

Rate movements have to be set for the general good of the economy, not for a few people who want cheap houses. What good is a cheap house if you have no job ?

Come again?

Share this post


Link to post
Share on other sites

Rising cost of living along with unchanging wages will take money out of people's pockets just as easily. Loved the comment from the moron, though, who complained about inflation and then cited it as a reason why interest rates shouldn't rise :lol: Shows just how 'fick' a large chunk of the population are.

In the meantime, low rates encourage even more people to take on debt, making the eventual 'crunch' when rates have to rise even worse.

The only economic strategy the powers that be have is 'cheap money and asset bubbles'.

Share this post


Link to post
Share on other sites

I think the BOE will sit tight until the Eurozone gets sorted out. If the rest of the EU was in a stronger position I could see rates rising immediately though. We need decent global growth / solid world markets to grow via exports.

If Europe crumbles the recovery is going to be much slower, probably best to wait and see what happens and then raise slowly. Sentance is right that we need a slow steady raising of rates rather than sharp jumps.

Share this post


Link to post
Share on other sites

Crikey O Reilly. Have you read the comments underneath? Are these people insane? Blind? Desperate? All of the previous? And more?

you are the blind one, not them.

When are you all going to realise that what passes for consensus here on HPC is simply a tiny bastion of fringe opinion when measured against the rest of the UK, and indeed world, population.

In fact there is no good reason to believe that this tiny little minority is in fact right, and the rest of the population wrong. In fact statistically I'd say the liklihood is the other way about.

Each month sentance calls for a a 50 point rise and each month nothing happens.

Share this post


Link to post
Share on other sites

you are the blind one, not them.

When are you all going to realise that what passes for consensus here on HPC is simply a tiny bastion of fringe opinion when measured against the rest of the UK, and indeed world, population.

In fact there is no good reason to believe that this tiny little minority is in fact right, and the rest of the population wrong. In fact statistically I'd say the liklihood is the other way about.

Each month sentance calls for a a 50 point rise and each month nothing happens.

http://en.wikipedia.org/wiki/Wisdom_of_the_crowd

Share this post


Link to post
Share on other sites

they should raise IR, will be good in the long run if they do , get it all over with quick

but i think they will not until 2012

Why, what happens in 2012?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 150 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.