Jump to content
House Price Crash Forum
Gman

Boe Forcasted To Raise Interest Rates Within 6Months!

Recommended Posts

YESSSS !!!

The Bank of England will start raising interest rates within six months to curb inflation, the Confederation of British Industry said.

The Monetary Policy Committee will increase its benchmark interest rate by a quarter-point every three months from the second quarter of 2011 until mid-2012, the London-based group said in a report today. It will then step up the pace of increases to end that year with a rate of 2.75 percent.

This is great news people.

( And please allow me a just a little smugness, just a little bit, as I guestimated that a few days ago - that their best option would be small quarterly increases. It was after the BoE released that report, worried that many indebted people were not using this low rate opportunity to pay down debt. Remember? The Telegraph reported it too. We had a thread here. It sounded to me as an advanced warning by the BoE, a signalling. I did post about that here. Including 0.25% increases every few months! :D I'll look for that post. )

Edit to add:

(...)

But there may be a solution. The Bank could increase the base rate by just 0.25 in the next meeting, and then stay at 0.75 for a few months. Nobody would be able to accuse the bank for bankrupting "families" with such a small increase.

They could even give more warnings then that the next trend should be upwards. And then they could repeat these 0.25% increases every 3 or 4 months, giving plenty of time for responsible people to adapt to it, by downgrading, or STR, etc.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=156314&view=findpost&p=2825902

:D

Edited by Tired of Waiting

Share this post


Link to post
Share on other sites

I'm sticking with my earlier predictions of a token rise in Q1 2011

Even a 0.25% increase would not be just a "token". It would signal a direction of travel to the market. It would be very important. It would even get the tabloids and the BBC and ITV news reporting it, and reaching the sheeple.

And I don't think it would stop there. It will depend on inflation, of course, but with the VAT increase I think overshooting the target is almost guaranteed. And the BoE can't afford to lose even more credibility, and still hope top sell gilts easily. And with inflation overshooting they will not have the QE option, or they would lose even more credibility, and make even more difficult to sell gilts next time - just a few months later, at this current deficit.

Great news doccyboy. From Boolberg to the Telegraph already. Let's see if it gets to the more popular media too.

Share this post


Link to post
Share on other sites

zzzzzzzzzzzzzzzzzzzzzzz

computer says no.

Rates will not rise. Even rates at 1% would deem the majority unable to pay their mortgages.

People who write such reports have no idea what people at the coal face's situations are/.

Share this post


Link to post
Share on other sites

Bank of England policy makers remain divided over the need to curb inflation or increase bond purchases to counteract the effect on the economy of the government’s fiscal squeeze. Inflation accelerated to 3.3 percent in November, surpassing the government’s 3 percent limit for a ninth month.

No mention of the 2% target. Now it's just the outer limit of 3% which they've been breaching.

"Policy makers" used to be always divided over whether it was best to do this or best to do that.

That's one of the reasons they gave the job to the BoE and targeted inflation with a definite specific target which was helpfully written down on a sheet of paper for the BoE so there could be no mistake and it was even signed by the Prime Minister - so there would also be no division over whether it was best to do this or best to do that.

You know, the BoE would be losing credibility if they had any left to lose.

Edited by billybong

Share this post


Link to post
Share on other sites

I doubt IR's will rise until 2014.

Right now the economy remains fragile, almost to the extent that talk of higher interest rates cause demand to slump and so interest rates have to stay low.

I reckon inflation needs to go nuclear before anything will actually happen, and it hasn't yet done so.

Share this post


Link to post
Share on other sites

zzzzzzzzzzzzzzzzzzzzzzz

computer says no.

Rates will not rise. Even rates at 1% would deem the majority unable to pay their mortgages.

People who write such reports have no idea what people at the coal face's situations are/.

http://www.bankofengland.co.uk/publications/fsr/2010/fsrfull1012.pdf

Just use the keyword "household" and do a search there.

They know. But they have no option. There is no more money. And they can't print more. And they are running out of credit/credibility too. they have no option.

Share this post


Link to post
Share on other sites

For me its a given, but i am a VI, i own no house, i rent, i have no mortgage, i have a bit in savings, but:

The Olympics lands mid 2012, and as always, it will cost to come here, cost a great deal, you can bet your bottom dollar Sterling will be strong come mid 2012, why because thousand will be transferring their local currency's into Sterling to spend in Blighty. It will be no, look how much Sterling we can get, it will be so cheap in the UK. No it will be, Jesus, the UK is so expensive, with Sterling so strong.............

So for me, mid 2012, interest rates at least 3% or higher, and Sterling hitting highs. But by then China will have gone POP, and commodities will revert back to what i would call trend or even undershoot?

Share this post


Link to post
Share on other sites

(...)

You know, the BoE would be losing credibility if they had any left to lose.

They are still managing to sell gilts = borrow money. Therefore they still have some credibility. For now. But to keep this they cannot lose control of inflation.

Share this post


Link to post
Share on other sites

Bloomberg has been bigging up the crisis in Europe, and today they were full of the CBI report claiming not only that interest rates will rise next year, but when and by now much. Apparently the CBI thinks there'll be a 0.25% increase in the and quarter of 2011, followed by a similar rise in the next quarter and then bigger rises.

I agree interest rates are likely to rise, but I don't see how anyone can find a basis to back up such specific guesses. :lol:

However, they had someone else talking about how many states in the US are in deep debt crisis too - not new news but hinting that it's getting worse.

Edited by Hyperduck Quack Quack

Share this post


Link to post
Share on other sites

(...)

I agree interest rates are likely to rise, but I don't see how anyone can find a basis to back up such specific guesses. :lol:

(...)

Do you really think that the CBI (Confederation of British Industry) is just "guessing" here? That they were not warned about it by the BoE/Gov.?

Share this post


Link to post
Share on other sites

Do you really think they're not guessing? At best they're just extrapolating out from current market expectations. A year ago hikes in 2010 were priced across the BoE, ECB and Fed but things change. You and I have about as much of an idea of how the economy will be in 2012 as they do.

If by "they"you mean the BoE, then I think you have a point there, re. 2012 only though. As it does sound like the BoE is warning both households and the markets that they will increase interest rates in 2011 - by small, 0.25% steps. Of course they don't know precisely when, or how many, but at least twice, and the first in the first half of the year. This much is being signalled, I'm quite sure of it.

Share this post


Link to post
Share on other sites

If by "they"you mean the BoE, then I think you have a point there, re. 2012 only though. As it does sound like the BoE is warning both households and the markets that they will increase interest rates in 2011 - by small, 0.25% steps. Of course they don't know precisely when, or how many, but at least twice, and the first in the first half of the year. This much is being signalled, I'm quite sure of it.

perhaps they could do a fan chart between now and 2012 with rates ranging between -20 and 20%, they should be able to hit that range

Share this post


Link to post
Share on other sites

For me its a given, but i am a VI, i own no house, i rent, i have no mortgage, i have a bit in savings, but:

The Olympics lands mid 2012, and as always, it will cost to come here, cost a great deal, you can bet your bottom dollar Sterling will be strong come mid 2012, why because thousand will be transferring their local currency's into Sterling to spend in Blighty. It will be no, look how much Sterling we can get, it will be so cheap in the UK. No it will be, Jesus, the UK is so expensive, with Sterling so strong.............

So for me, mid 2012, interest rates at least 3% or higher, and Sterling hitting highs. But by then China will have gone POP, and commodities will revert back to what i would call trend or even undershoot?

The Banks are the biggest VI going, and they don't like having to take write downs.

Share this post


Link to post
Share on other sites

perhaps they could do a fan chart between now and 2012 with rates ranging between -20 and 20%, they should be able to hit that range

I confess: Those fan charts did cross my mind whilst I was typing that post. :D

Share this post


Link to post
Share on other sites

The Banks are the biggest VI going, and they don't like having to take write downs.

Why not? In their case it is just a matter of printing it.

Edited by Tired of Waiting

Share this post


Link to post
Share on other sites

By 'they' I mean everyone. I don't think the BoE is warning anyone of anything as a whole. It is a group of people with varied opinions, with different members rolled out on different days to spread a particular message in line with market expectations. Obviously they have the power to direct economic change but is we assume a steady state today of unchanged rates I would hazard a guess nobody including the committee knows yet when the next hike will be.

Also you seem to be inferring that if by 'they' I'd meant the CBI such reasoning would make less sense - i.e that the CBI has a better idea of when rates will rise than the BoE? That may well be the case, but that in turn means your earlier rationale of 'being warned by the BoE' doesn't make any sense.

As to your feeling, it may well be correct but today it is just a guess.

I disagree. The VAT increase will push inflation up, and force the committee to start increasing the base rate in the first half of they year. And I am pretty sure the committee knows that, and is warning the nation about it.

Share this post


Link to post
Share on other sites

I'm sticking with my earlier predictions of a token rise in Q1 2011

Unfortunately I think you are right. Small increases while making sure real rates stay negative. This is still going to come as a scare to many of the overexposed debtors.

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.

  • 311 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.