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No Rate Rise Until October

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http://uk.reuters.com/article/2011/03/31/uk-boe-rates-poll-idUKLNE72U00220110331

Apologies if already reported on here

(Reuters) - The Bank of England will probably wait until the third quarter before raising interest rates from a record low 0.5 percent, a Reuters poll of economists showed on Wednesday.

The survey of 67 respondents, taken this week, showed just a 45 percent chance the Bank of England would hike interest rates before the middle of this year, despite inflation hitting a 28-month high of 4.4 percent in February.

Not unlike the divided BoE's Monetary Policy Committee (MPC), the Reuters sample of economists from banks and research institutions was split between those forecasting a rate hike soon -- with several pointing to May -- and others saying late this year and beyond.

The consensus overall suggested most MPC members would want to see further evidence of Britain's economy strengthening sufficiently to weather hike rates.

"Massive uncertainty remains over exactly when interest rates will start to rise," said Howard Archer from IHS Global Insight.

"Whether or not the Bank of England hikes interest rates in the second quarter will depend critically on how well the economy performs over the coming weeks as the fiscal tightening really kicks in."

Exactly how the economy is faring right now seems unclear. After a shock 0.5 contraction in the fourth quarter of last year, several economic indicators pointed to a strong rebound in the first two months of this year.

However, Nationwide's consumer confidence index hit its lowest since records began in February, it said on Wednesday, hours after major retailers Dixons (DXNS.L) and Sainsbury (SBRY.L) warned of a dire outlook for consumers in the year ahead.

Economists polled by Reuters three weeks ago expected the UK economy to grow 0.7 percent in the first quarter over the previous quarter, before slowing slightly in subsequent quarters as government budget cuts increasingly bite.

TIME TO UNWIND?

MPC members with opposing views have upped the stakes with efforts to press their cases for tightening or loosening monetary policy.

Adam Posen said on Monday he would not seek a second term on the MPC if his persistent lone call for more quantitative easing turns out to be a mistake.

Conversely, his colleague Martin Weale on Tuesday reiterated his belief that monetary policy should be tightened. The BoE should give more weight to the risk of higher-than-expected inflation given its track recent record of missing its 2 percent inflation target, he said.

Only one economist in the survey thought the BoE would hike interest rates to 0.75 percent at its meeting next week, with the survey's median showing only a 15 percent probability of this occurring. However, 25 respondents earmarked May for the next move.

"We continue to look for a move in May, but this is primarily due to the signal sent by the MPC voting patterns," said Peter Dixon from Commerzbank.

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Guest The Relaxation Suite

Comme j'ai dit.... more chance of the Duke of Edinburgh going on TV dressed as Kermit the Frog and telling the British population that the world is run by reptoids who live deep underground in Zambia than there is of a rate rise any time soon.

Really, there really is more chance of this happening.

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No rate rise until Mystic Merc can't use "temporary factors" as an excuse. So Q1 2012 at the EARLIEST :(

There will be new temporary factors by then. I don't think Merv can use that excuse very much longer.

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Comme j'ai dit.... more chance of the Duke of Edinburgh going on TV dressed as Kermit the Frog and telling the British population that the world is run by reptoids who live deep underground in Zambia than there is of a rate rise any time soon.

Really, there really is more chance of this happening.

As the bad news piles up you may well be right.

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Decisions, decisions...what's an MPC member to do?

(Reuters) - Manufacturing activity growth weakened more than expected in March after the inflow of orders slowed sharply, but firms still ramped up prices at a record rate to cover rising costs, a survey showed on Friday.

The Markit/CIPS manufacturing PMI headline index fell to a five-month low of 57.1 in March from a downwardly revised 60.9 in February. Analysts had expected a more modest easing to 60.6.

The output prices index, however, rose to 65.2 in March from 63.6 in February, the highest since the series began in 1999.

The figures highlight the dilemma facing Bank of England policymakers over how to tackle persistently above-target inflation without harming a fragile economic recovery.

The slowdown in manufacturing -- which has so far been the one bright spot in the UK economy -- is likely to reinforce expectations the central bank will hold off raising interest rates until the recovery is on a firmer footing.

Money markets have pushed back expectations for the first rise in interest rates from 0.5 percent to August from May, largely as a result of weak news on consumer activity.

"A survey-record increase in factory-gate prices may also be a sign of greater pass-through of elevated raw material prices down the supply-chain, potentially making

"Persistent high oil prices due to the unrest in the Middle East and North Africa, rising global prices for many other raw materials and higher import prices due to the weak pound, all led to a survey-record rise in prices charged by manufacturers," said Markit economist Rob Dobson.

"The Monetary Policy Committee's balancing act between growth and inflation has perhaps become even more precarious."

Reuters

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This is excellent news. The longer rates stay low and HPI prevails, the longer it gives me to get another few years' experience at work before leaving for Germany, without the allure of 'cheap' housing here.

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The output prices index, however, rose to 65.2 in March from 63.6 in February, the highest since the series began in 1999

So inflation looks to continue it's upward trend at least for now. Our output prices (tyre manufacture) are increasing almost monthly and will continue to do so due to high import costs, rubber is at an all time high, combine this with high fuel costs and local raw materials prices also increasing (presumably as a result of the high fuel costs) and not only are our prices rising but profit margins are falling.

Not only that but due to a similar squeeze in haulage industry hauliers are laying up lorries to cut back on fuel and so are using fewer tyres, our orders have plummeted in the last month. Our stock rooms are overflowing now and we have just laid off staff last week. We weathered 2008/09 very well, this so far is much worse than i have ever known it! it's not a good situation.

High inflation is destroying the economy. But ironically Merv may actually be right as high inflation causes a second crash into recession and destroys demand inflation will almost certainly fall considerably. Then Merv can say I told you so! When in reality he caused the bloody mess!

Edited by Pent Up

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By then inflation should be running at about 8% ,wont be able to afford to eat but least you will have a cheap mortgage :blink:

Only really works if wage inflation is following closely behind and no signs of that happening.

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The truth is nobody knows about rates. Nobody knows whether we'll have another crash or not. Stop speculating and live your lives. I fear a lot of you will miss opportunities that suit your own personal circumstances because you follow the hurd on this forum.

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The truth is nobody knows about rates. Nobody knows whether we'll have another crash or not. Stop speculating and live your lives. I fear a lot of you will miss opportunities that suit your own personal circumstances because you follow the hurd on this forum.

And why are you here?

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Rate rises or not, they ain't going to go up by much when they do.

With so many up to their eyeballs in debt, a 0.25% increase in this era will be like a 1% increase of old.

Base rates going back to 4%, will have the same effect that 16% had in the old days, especially as nearly all the other costs of living are sky high already.

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223% of economystics predict that October will fall in the 3rd quarter this year, a rise of 17% since 2012

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Yet another stupid sesnationalised thread title on HPC.co.uk

Title = no rate rise until october

Article = 45% (so pretty much 50/50) think there will be a rise before the middle of the year (end of June)

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Rate rises or not, they ain't going to go up by much when they do.

With so many up to their eyeballs in debt, a 0.25% increase in this era will be like a 1% increase of old.

Base rates going back to 4%, will have the same effect that 16% had in the old days, especially as nearly all the other costs of living are sky high already.

My demographic must be different to yours, as everyone I know has a chunky, comfy cushion for mortgage repayments, based on major overpayments over the last few years as rates fell so far below expected. In fact, a 5+ years ago everyone was saying "my house is worth x", now it's "I'll have paid off the mortgage x years early" or "If I'm made redundant I can afford x months/years without work".

I'm sure this applies to a group with a certain level of income and a certain type of attitude, but these people aren't concerned about the idea of the sort of minor rate rises we're likely to see over the next year or two.

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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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