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Bloomberg: Bank Of England To Keep Rates On Hold As Recovery Concern Trumps Inflation

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http://www.bloomberg.com/news/2011-03-04/bank-of-england-to-hold-rate-next-week-as-it-awaits-evidence-of-recovery.html

Bank of England to Keep Rates on Hold as Recovery Concern Trumps Inflation
The Bank of England will leave its benchmark interest rate unchanged at a record low next week as policy makers hold off tackling inflation on concerns about the strength of the recovery.
The nine-member Monetary Policy Committee, led by Governor Mervyn King, will leave its key rate at a record low of 0.5 percent, according to all 61 economists in a Bloomberg News survey. They’ll also keep their bond purchase plan at 200 billion pounds ($326 billion), said all 34 economists in a separate poll.

Hike = HPC

Therefore: No hike.

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Hike = HPC

Therefore: No hike.

Hike = Crash bang wallop HPC.

Seems like prices will slide slooooowly downwards even if they don't raise.

I'm bloody well sick of this. Can someone please remind me what will happen if they leave rates low while inflation takes off?

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Hike = Crash bang wallop HPC.

Seems like prices will slide slooooowly downwards even if they don't raise.

I'm bloody well sick of this. Can someone please remind me what will happen if they leave rates low while inflation takes off?

Rates will need to go up in very bigger steps, very very fast.

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Hike = Crash bang wallop HPC.

Seems like prices will slide slooooowly downwards even if they don't raise.

I'm bloody well sick of this. Can someone please remind me what will happen if they leave rates low while inflation takes off?

General Congreve will become the richest person in the kingdom.

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So you reckon that if they let inflation out of the bag, then they will have to resort to big hikes. Inflation is high now, they haven't hiked.

I want to know why they can't sit around for the next five years with the base rate at 0.5 percent and inflation running at 5 percent. That's what we will soon have, and our pound is still worth about as much as it was two years ago. Our gilts are still, well gilt edged.

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So you reckon that if they let inflation out of the bag, then they will have to resort to big hikes. Inflation is high now, they haven't hiked.

I want to know why they can't sit around for the next five years with the base rate at 0.5 percent and inflation running at 5 percent. That's what we will soon have, and our pound is still worth about as much as it was two years ago. Our gilts are still, well gilt edged.

Although wearing very thin they are relying on their credibility that it will start to fall back from Q1 2012, if it doesn't the markets will react and pay demands will most likely spiral.

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The lack of faith in the BoE on this site is truly shocking. They are better economists than we are, and from their figures, they are able to tell us with some confidence (over the past 2 years) that inflation is going to go down sometime.

Rather than simply just closing their eyes and hoping that inflation will go away, they are actively maintaining the IR at the optimum 0.5%.

That is all.

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Some one correct me if I'm wrong ,with inter bank swap rates rising at a steady rate and the SLS money now being repaid there must come a point when the low rate svr/boe tracker loans(the one`s written pre 07/08) become loss making for the banks as they are going to have to refinance them on the open market(@3.50/75%?) as SLS is due repayment

At this point the bank will have to raise the BR wont they?if so is this the reason for all the ramping of fixed rate mortgage`s of late ,which would allow the BOE to hold rates a bit longer if enough swap to them from their svr/boe tracker

But I`m working on the principal the0.5% BR is only in place to allow the banks to recapitalise before they have to take the hit when rates do rise

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The lack of faith in the BoE on this site is truly shocking. They are better economists than we are, and from their figures, they are able to tell us with some confidence (over the past 2 years) that inflation is going to go down sometime.

Rather than simply just closing their eyes and hoping that inflation will go away, they are actively maintaining the IR at the optimum 0.5%.

That is all.

I'm sort of half with you, half against what you say. When the credit crunch happened, the BofE dropped the base rate and said inflation wasn't going to be a problem anyway. Rubbish I thought, dropping the base rate increases inflation. And lo and behold the BofE was right and because of the recession, inflation dropped. Now though, they keep on being slightly surprised about inflation, core inflation is bad and it just seems to be inflation, inflation inflation. Even on a world scale, with different places and base rates, it's inflation, inflation, inflation.

With some cash in the bank though, it's pretty fcking annoying that we have 5 percent inflation. The other thing is, they keep on going on about if we start to see wage inflation, I think we're about to start witnessing that. There seems some early indicators. Sure, policemen aren't about to to get a pay rise, but the private sector will start hiking in line with inflation.

As for the SLS, are they unwinding that? I thought it was like inflation fighting, if things look weak there is no way in hell they will start reversing the SLS.

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I was being just a little sarcastic.

While I fully agreed with the Banks decision to drop to 0.5% (desperate times/desperate measures) I have always been in the inflation camp. Frankly 4% and rising is unacceptable over such a long period of time.

The country has had many bad recessions but has never had the need to go to 0.5% - why is is so critical we stay at that level now - more than a year after the crisis which required it to be dropped.

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Aren't the tubes going on strike demanding higher wages? And the post office workers also? Anyone else yet?

Also high inflation will crash house prices just as high interest rates will. It's just a question of which one it's going to be.

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  • 285 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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