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Interest Rate Rise Delayed

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http://www.independent.co.uk/news/business/comment/david-prosser-higher-interest-rates-to-be-delayed-2242878.html

Outlook The economic consequences of the Japanese disaster may be felt especially acutely here in the UK in one specific way. If the way in which investors in gilts and interest rate futures were behaving yesterday is any guide, the earthquake might mean that the Bank of England's Monetary Policy Committee now waits longer than previously expected to increase the cost of borrowing.

Those markets were, until this week, pricing in an initial rate rise of 0.25 percentage points in May, followed by a second increase in October. Now the money seems to be on August and February 2012.

That shift is logical enough. We know that the balance of the debate about when to raise rates has been incredibly finely balanced, so even if the effect of the disaster in Japan is minimal here, it could be enough to tip the scales. Certainly, any threat to growth is likely to give the MPC pause for thought. And since this is a disaster that may, at the margins, ease the external inflationary pressures facing Britain, the case for delaying a rate rise because of it is stronger.

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You can see why they released that report saying average mortgage payer also owes £30,000 in other loans.

2% rise pushes average mortgage up £360 A MONTH - prob pushing loads over the edge/wiping them out

- which is why City are shit scared of raising interest rates = borrower defaults = (empty) Bank busts again!

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I heard that if Japan re-patriates all its pension cash to fund regeneration, we'd HAVE to raise our rates?

Is this not so?

Though the way things are going, there might not be anything to regenerate for a couple hundred thousand years.

Edit. Too many "ofs".

Edited by shindigger

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I don't understand.

If Japan sells assets (bonds etc) on the international market to fund regeneration, won't this drive down the price?

And in the case of bonds, where the price falls, the yield rises.

Oh wait. Maybe the idea is that the west will QEese hard to try and drive the yield down again.

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"ease the external inflationary pressures facing Britain" - how?

How dare you ask such awkward questions!

Don't you realise that we could be on the edge of a deflationary precipice?! :lol:

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File an anti-dumping complaint with the WTO, just in case.

Buy beans...sell £

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Buy beans...sell £

Don't be saki

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Really?

Does it work if you add their average £30,000 debt then (which is mind boggling in itself as some must be nearly up to £100,000?)

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I don't believe the average mortgage is £150k

The average may be a lot lower than this but there are plenty enough people on much higher mortgages to bring the country to the brink again when interest rates go up.

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CML data May 2010

Number of UK households with a mortgage: 11 million

Average outstanding mortgage: £112,600

2% = £187 a month

Only for IO mortgages. The numbers are smaller for repayment.

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Only for IO mortgages. The numbers are smaller for repayment.

Which stengthens my point further. This site can be quite silly sometimes, we start off with a claim that "2% rise pushes average mortgage up £360 A MONTH" and then discover it's more like half that at most.

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  • 312 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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