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Bearfacts

Mpc Discussed Raising Rates At Last Mtng

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Admist the usual bullsh*t from the Sunday Times BTL journos I found two very interesting and I believe significant ‘tit-bits’. First, the ever ‘rose tinted spectacle wearing’ David Smith let slip that the MPC had not only not discussed rate cuts at its last meeting but had actually discussed raising rates – a fact which does not seem to have merited a mention anywhere else in the media – surprisingly !

Smith then goes onto to say that he believes inflation will fall and rates will be cut next year - mind you, last December he said that oil would come back down to around $30 a barrel by early 2005 - so I think we can take his projections (wishes ) with an enormous rock of salt !

Second, Irwin Stelzer who writes on the US economy was analysing the Fed’s likely position on interest rates upto the departure of Greenspan and in the immediate aftermath and is projecting rates at 5% by next May.

Both these points and the likelihood that Eurozone rates are liley to start rising, lead me to conclude that UK rates will need to be at least 5% by then and probably higher maybe 5.5% – 6% to avoid a run on the pound which would raise inflation even higher.

How would the UK cope with rates at these levels , IMHO very, very badly and the housing market which can’t cope with rates at 4.75% would definitely collapse – fasten your seat belts chaps.

Edited by Bearfacts

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Both these points lead me to conclude that UK rates will need to be at least 5% by then and probably higher maybe 5.5% – 6% to avoid a run on the pound which would raise inflation even higher.

Im not so sure about the run on the pund argument so much now. Wasnt this theory disproved in '97-98 with many babnks loosing out? I would agree if Sterling was still a huge reserve currency. Alas, the empire is all but dead along with it sterling as a reserve. I agree, the fed raising rates aint going to help, but not so sure it will lead to 6%...

Then again, I may be wrong. Anyone else got a view on this, and is my view too simplistic?

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had actually discussed raising rates – a fact which does not seem to have merited a mention anywhere else in the media – surprisingly !

It's not surprising at all ! If there's any kind of tit-bit or anything whatsoever that could possibility lead to a rate cut, then the media reports it to titillate the public with a rate cut.

Remember the July bombings in London, and a report that came out which suggested the MPC would have an emergency meeting to cut rates ? The VIs even took advantage of that.

Yes, there are always suggestions to cut rates - but anything hawkish such as Mervyn Kings's comments is usually reported as "the MPC won't cut rates any further" rater than saying "the MPC will raise rates".

It's so predictable.

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I have been watching the £ to $ rate very carefully as I was thinking of moving our cash into dollars and what I see is that every time there is a rumour of a cut in rates the pound falls and every time a more hawkish tone is adopted the pound rises. So in my simple world view this is a very clear link , in order to maintain the current exchange rate ( which is needed to avoid inflating imports ) we would need to track the US rates from here on in and they are going up up and away.

I should say I am not an economist or a financial expert, I know nothing about bonds or gilts I just monitor the situation closely and apply a bit of logic.

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...David Smith let slip that the MPC had not only not discussed rate cuts at its last meeting but had actually discussed raising rates ...

Did he (or, can you) produce any evidence that this was the case? I don't recall reading anything in the minutes about either rises or falls being discussed. Why would such information be absent from the minutes? After all, if anyone had felt strongly enough to raise either question, (s)he would have wanted it minuted, would they not? Another media invention, perhaps?

p

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Guest Charlie The Tramp

Did he (or, can you) produce any evidence that this was the case? I don't recall reading anything in the minutes about either rises or falls being discussed. Why would such information be absent from the minutes? After all, if anyone had felt strongly enough to raise either question, (s)he would have wanted it minuted, would they not? Another media invention, perhaps?

p

I would think a stenographer would be in attendance throughout the two day meeting recording all words spoken as in Parliament.

The minutes are a much abridged version of what they want you to know.

After all the press would have a field day if there was a real battle of wills.

Funny how some MPC members make individual speeches giving hidden messages.

Maybe Mervyn has his own leak department who put out little feelers when he gets the hump with Gordon`s boys.

:)

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Maybe Mervyn has his own leak department who put out little feelers when he gets the hump with Gordon`s boys.

You forget that Mervyn, too, is one of 'Gordon's boys', having been appointed by him as was both of Merv's deputies on the MPC. That's another popular myth amongst the partly educated - that there is an 'in-house BOE' group and a 'Chancellor's' group; in fact, they're all 'Gordon's boys and girls'. The Treasury Committee, of course, cast their eye over the appointments, their purpose being, in their own words -

• to encourage the Government to appoint people with the qualities required

• to underline the independence, credibility and competence of the Bank, and

• to involve Parliament more closely in an important process.

Thought you might be interested.

p

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Guest Charlie The Tramp
Thought you might be interested.

Cheers. :)

As a matter of interest can Gordon sack Mervyn?

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Cheers. :)

As a matter of interest can Gordon sack Mervyn?

Looks like it - BoE

The 1998 Act provides for the appointment, by the Crown, of a Governor, two Deputy Governors and sixteen Non-Executive Directors . The term of appointment for the Governor and two Deputy Governors is five years and for the Directors, three years, all of which are renewable.

For 'the Crown' read 'The Chancellor of the Exchequer'. Even if he can't sack him, he can always refuse to renew his appointment.

BoE Court

Court consists of the Governor, two Deputy Governors and 16 Directors. The Directors are all non-executive. The Governors are appointed by the Crown for five years and the Directors for three years.

So, the Crown (i.e. for all intents and purposes, Gordon Brown) appoints the Court who then appoint the executives.

All in all, I think that Gordon's in charge. Don't you?

p

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Guest Charlie The Tramp
All in all, I think that Gordon's in charge. Don't you?

Well the next twelve months will be very interesting then.

:)

Gordon gives the BoE a free hand to do what needs to be done or goodbye UK economy, or the pain could be a lot worse IMHO of course.

I loved the Dear Gordon spoof letter pinned in this forum. <_<

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Did he (or, can you) produce any evidence that this was the case? I don't recall reading anything in the minutes about either rises or falls being discussed. Why would such information be absent from the minutes? After all, if anyone had felt strongly enough to raise either question, (s)he would have wanted it minuted, would they not? Another media invention, perhaps?

I have tapes of the meeting passed to me from my contact 'deep stoat' who bugged the bank. Give me your address and I'll forward a copy to you !

What kind of evidence are you expecting in a sunday paper ? ... a signed witness statement perhaps ?

It is in of the Sunday Times money section pg 6 'Don't panic the partys not over - quite yet';

"These inflation fears were re-inforced when the Bank of Englands monetary policy committee was revealed to have discussed raising interest rates in its meeting earlier this month, while voting 9-0 against a cut"

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Guest wrongmove

Did he (or, can you) produce any evidence that this was the case? I don't recall reading anything in the minutes about either rises or falls being discussed. Why would such information be absent from the minutes? After all, if anyone had felt strongly enough to raise either question, (s)he would have wanted it minuted, would they not? Another media invention, perhaps?

Here's the quote: (David Smith, OUTLOOK

""....But now people are starting to get excited again. Last week inflation measured by the consumer prices index (CPI) hit its highest level since 1996. The Bank of England’s monetary policy committee (MPC) was talking, not about cutting interest rates further, but fretting about whether they might have to go up if high oil prices started to convince people and businesses that higher inflation was here to stay...."

He isn't very specific, and doesn't really back up his claim.

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I have been watching the £ to $ rate very carefully as I was thinking of moving our cash into dollars and what I see is that every time there is a rumour of a cut in rates the pound falls and every time a more hawkish tone is adopted the pound rises. So in my simple world view this is a very clear link , in order to maintain the current exchange rate ( which is needed to avoid inflating imports ) we would need to track the US rates from here on in and they are going up up and away.

I should say I am not an economist or a financial expert, I know nothing about bonds or gilts I just monitor the situation closely and apply a bit of logic.

think twice about switching from £ to $. the dollar may rise in the short term (interest rates - unless we get some good decisions in the mpc) but long term i don't think the us dollar will be a good place to be unless they can get their balance of payments and trade balance sorted out.

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  • 301 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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