Carney Voted Against More Qe

[@contradevian]

Seems that Carney didn't vote for more QE unlike King. Entire committee voted to keep QE and rates unchanged. UK Gilt yields up. Cable up too.

http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/pdf/2013/mpc1307.pdf

Edited July 17, 2013 by Secure Tenant

[The Knimbies who say No]

Seems that Carney didn't vote for more QE unlike King. Entire committee voted to keep QE and rates unchanged. UK Gilt yields up. Cable up too.

It's all boolurks though, isn't it?

From 2011:

DeAnne Julius and Tim Besley said they would support a rate rise were they still on the nine-member Monetary Policy Committee (MPC), so long as the majority verdict was to leave rates unchanged at 0.5pc. The MPC will publish its decision at noon on Thursday.

Ms Julius, a founder member of the MPC and now chairman of international affairs institute Chatham House, told Fathom Consulting's Monetary Policy Forum that she would "put down a marker" for a rate rise. "If the majority was for hold, I would vote for an increase," she said.

Mr Besley, who was on the MPC until August 2009, also indicated he would join current MPC members Andrew Sentance and Martin Weale in voting for a rise so long as his was not the swing vote. "I'm pleased two members want to raise rates," he said.

http://www.telegraph.co.uk/finance/personalfinance/interest-rates/8314084/Bank-of-England-urged-to-vote-for-higher-interest-rates-by-ex-MPC-members.html

As for gilts yields, this caught my eye in an article regarding an attempt to fraudulently manipulate yields on QE bonds:

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10183837/Bankers-tried-to-manipulate-QE-says-BoEs-Paul-Fisher.html

.....

As well as possible rigging, the committee heard that the recent rise in gilt yields was likely to be permanent, with potentially huge implications for Government borrowing costs.

Since the Budget, the 10-year gilt rate has jumped from 1.827pc to 2.272pc. The small rise will add £1bn to the UK’s £50bn of debt interest costs next year and £2bn in 2015 compared with the Government’s central forecast in March, analysis of the Office for Budget Responsibility’s data shows.

Mr Fisher said markets were “right to reprice” and added he was not sure the adjustment was over. Robert Stheeman, chief executive of the Debt Management Office that runs the gilt issues, agreed that the prices now seem “to reflect the current conditions much more appropriately”.

Markets see-sawed in June after the US revealed plans to “taper” QE, with shares slumping and bonds yields rising. Prices have since settled but Mr Fisher warned of more violent swings ahead. “I could easily see more volatile periods than this in the months to come,” he said.

Watch the hands, of course, but it is interesting that talk of a move to higher yields is now commonplace. I'm not sure I agree that current prices in any way reflect risks though, but a move higher is a start, hopefuly they will keep going too.

[@contradevian]

It's all boolurks though, isn't it?

Yes it is, but Carney isn't looking like the "print to infinity" that many of us on here predicted.

And in any case shouldn't be necessary as the UK claimant count also fell rapidly this month (if they are to be believed).

Down 21.2k against 7.5k "expected."

[57percent]

Would we expect him to vote for more QE on vote 1?

Would look even worse if he voted for and everyone outvoted him from the start.

They'll print.

[dances with sheeple]

Yes it is, but Carney isn't looking like the "print to infinity" that many of us on here predicted.

And in any case shouldn't be necessary as the UK claimant count also fell rapidly this month (if they are to be believed).

Down 21.2k against 7.5k "expected."

I had a feeling Carney wasn`t going to be what many thought, he is going to be a token figure to pin some "bad news" on? Sky or BBC, can`t remember which, had a piece the other night where they specifically asked "when will house prices come down?" but unfortunately to offset this admission of what has to happen they had to fudge the answer so we got "We took decades to get to this position, so decades to unwind" They are getting to what they need to be saying, "HPC and rates up are coming", but they can`t yet say it all in one mouthful

Edited July 17, 2013 by dances with sheeple

[FreeTrader]

The MPC minutes make it clear that members voted unanimously for holding QE at £375bn because the Committee felt it would not be sensible to increase the programme while other means of monetary stimulus are being considered.

Some members were still in favour of further stimulus, but voted for a hold this month for the above reason.

Additionally the Committee said that if any rise in gilt yields and market rates were to persist then it would present an unwelcome and unwarranted monetary tightening.

It's obvious that they are not going to allow interest rates to rise prematurely. If the currency takes a hit in the process then so be it.

[The Knimbies who say No]

Yes it is, but Carney isn't looking like the "print to infinity" that many of us on here predicted.

And in any case shouldn't be necessary as the UK claimant count also fell rapidly this month (if they are to be believed).

Down 21.2k against 7.5k "expected."

True, but it's also the case that this vote started on his third day in the job.

[dances with sheeple]

The MPC minutes make it clear that members voted unanimously for holding QE at £375bn because the Committee felt it would not be sensible to increase the programme while other means of monetary stimulus are being considered.

Some members were still in favour of further stimulus, but voted for a hold this month for the above reason.

Additionally the Committee said that if any rise in gilt yields and market rates were to persist then it would present an unwelcome and unwarranted monetary tightening.

It's obvious that they are not going to allow interest rates to rise prematurely. If the currency takes a hit in the process then so be it.

What other means are they thinking of? House buying help schemes?

[FreeTrader]

What other means are they thinking of? House buying help schemes?

They don't say.

Here's the quote:

"An expansion of the asset purchase programme remained one

means of injecting stimulus, but the Committee would be

investigating other options during the month, and it was

therefore sensible not to initiate an expansion at this meeting."

http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/pdf/2013/mpc1307.pdf

[The Knimbies who say No]

Anyone in any doubt as to whether the BoE are proud property ladderistas should take a look at this:

14 Growth in the second half of the year would depend in large part on the behaviour of the household sector. There were some signs that consumer sentiment was improving. The increase in consumption in Q1 looked to have been broadly based, with rises on a year earlier in spending on durables, non-durables and services. And the fall in the household saving rate, although probably exaggerated by some shifting in the timing of income flows to take advantage of the lowering of the top rate of income tax in April, might indicate some reduction in precautionary saving. Credit availability had continued gradually to improve, in part due to the impact of the Funding for Lending Scheme, and there had been further small falls in most household lending rates. This could provide some support to consumer spending as a rise in housing transactions stimulated associated purchases of durable goods. Indeed, indicators of both prices and activity in the housing market had continued to improve: mortgage approvals had picked up sharply in May, albeit from low levels, and both the Nationwide and Halifax house price indices had risen in June. There had been a material increase in the RICS price balances in June, which had been provided to the Committee ahead of the meeting.

15 Set against that, real income growth had remained weak, even abstracting from changes in the timing of income flows, and it was unlikely that consumption growth could continue at its current rate without some rise in real incomes. Although the level of household debt as a proportion of income had fallen back from its peak, it remained high by historical standards and it was probable that households had further to go in adjusting their balance sheets. Moreover the rise in bank funding costs over the month might, if it persisted, slow down the rate at which credit availability would improve.

[@contradevian]

Apparently wage growth has picked up slightly too.

"wages growing a bit faster too at 1.7 percent says ONS" according to @ITVLauraK

Bit of a quandary for them if wage rises for ordinary plebs start picking up. They usually like to stamp on that, unless its banker earnings of course!

Edited July 17, 2013 by Secure Tenant

[winkie]

Would we expect him to vote for more QE on vote 1?

Would look even worse if he voted for and everyone outvoted him from the start.

They'll print.

....and you want to end up having the Euro for your currency?

[TrevorS]

Anyone in any doubt as to whether the BoE are proud property ladderistas should take a look at this:

Yep. Rise in house prices = improvement. Improvement for whom? Still confusing symptoms and causes. The HPI meme is deeply embedded at all levels.

[zugzwang]

They don't say.

Here's the quote:

"An expansion of the asset purchase programme remained one

means of injecting stimulus, but the Committee would be

investigating other options during the month, and it was

therefore sensible not to initiate an expansion at this meeting."

http://www.bankofeng...013/mpc1307.pdf

(MBS) Mortgage Backed Securities are what he'll be buying in addition to Gilts. From August onwards my guess as I believe he'll need to start printing before Bernanke announces a taper.

[TrevorS]

Bit of a quandary for them if wage rises for ordinary plebs start picking up. They usually like to stamp on that, unless its banker earnings of course!

They don't like it but it's absolutely necessary if the debt is to be inflated away. Lesser of two evils.

[gf3]

Would we expect him to vote for more QE on vote 1?

Would look even worse if he voted for and everyone outvoted him from the start.

They'll print.

I didn't expect Carney to vote for QE ,but I did think there would be still 3 voters for QE with one of the other MPC members voting.

Just feel that the voting result is stage managed.

[dances with sheeple]

They don't say.

Here's the quote:

"An expansion of the asset purchase programme remained one

means of injecting stimulus, but the Committee would be

investigating other options during the month, and it was

therefore sensible not to initiate an expansion at this meeting."

http://www.bankofeng...013/mpc1307.pdf

A full blown HPC would stimulate the economy, and they could print money to prop the banks chosen to survive? People can`t be spending off the back of perceived "equity" any more, can they?

[dances with sheeple]

I didn't expect Carney to vote for QE ,but I did think there would be still 3 voters for QE with one of the other MPC members voting.

Just feel that the voting result is stage managed.

I think all the stage managed stuff is now about prepping people for HPC and higher rates, they know they can`t suppress mortgage rates for ever?

[57percent]

They don't say.

Here's the quote:

"An expansion of the asset purchase programme remained one

means of injecting stimulus, but the Committee would be

investigating other options during the month, and it was

therefore sensible not to initiate an expansion at this meeting."

http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/pdf/2013/mpc1307.pdf

I dread to think what they'll come up with.

But surely they have to continue buying gilts too. Otherwise who else would buy them?

[dances with sheeple]

I dread to think what they'll come up with.

But surely they have to continue buying gilts too. Otherwise who else would buy them?

Have they reached the limit of their powers? Are the banks ready to tough out a proper HPC, and are they now ready to embrace that?

[57percent]

Have they reached the limit of their powers? Are the banks ready to tough out a proper HPC, and are they now ready to embrace that?

Don't be silly. They'll probably buy all the existing mortgage debt from the banks.

I find it amazing that a government and central bank would stop at nothing to keep some people rich and many poor.

[dances with sheeple]

Don't be silly. They'll probably buy all the existing mortgage debt from the banks.

I find it amazing that a government and central bank would stop at nothing to keep some people rich and many poor.

They are protecting the banks, not debt owning sheeple though, sales volumes have collapsed meaning most people will never sell their little pile of bricks for what they thought they could. If the banks can survive they will do good mortgage business after a proper HPC.

[57percent]

They are protecting the banks, not debt owning sheeple though, sales volumes have collapsed meaning most people will never sell their little pile of bricks for what they thought they could. If the banks can survive they will do good mortgage business after a proper HPC.

I don't think they're deliberately helping the banks or rich people. They're chasing growth as it's the only answer they can see. For growth they need debt and for debt they need banks and they need people to be confident enough to invest*

* buy an overpriced home.

[Executive Sadman]

Yes it is, but Carney isn't looking like the "print to infinity" that many of us on here predicted.

And in any case shouldn't be necessary as the UK claimant count also fell rapidly this month (if they are to be believed).

Down 21.2k against 7.5k "expected."

Is there a breakdown for part time/full time here as in the US?

According to Schiff, if US unemployment was calculated at the same way it was pre 1994 (U6), it would be running at 23%

Or is the replacement of full time jobs with part time jobs peculiar to the US only due to obamacare restrictions?

[Gigantic Purple Slug]

The election is less than two years away. That is all that matters and the campaign is in full swing. They can't afford a fall in house prices or a rise in interest rates until after the election. IMHO Carney will print to kick start the recovery and generate GDP 'growth', the final cost is irrelevant as long as there is 'growth'.

There are some issues though. They have to follow the US lead to some degree re rates. I was disappointed recently to see that the US recovery is looking less strong than expected. I was hoping that the US recovery will lead to rates rising here and that precipitating a crash but now I am not sure.

Regarding Carneys printing, I'm not so sure on this, but doesn't he have to print or the tories claim of reducing the deficit will not stand ?

Effectively as I understood it the Tories are printing the deficit. There is no growth. Therefore if the spending plans are to go on track printing has to continue in some shape or form.

There was some issue I remember being raised some time back that the BOE was not allowed to own more than 60% of any gilt class or something like that, because it would (don't laugh) affect market stability. This surely puts a cap on how much QE will be done. Maybe the recent hints that Carney is trying to diversify QE is a way round this.

I think globally though you are right. The big cuts are almost inevitable after 2015. But they are going to try to print in some way up to that date in order to win the election. The fly in the ointment will be whether the rest of the world decides to co-operate or not.