Mark Carney Set For Interest Rate Promise To Lift Economy

[interestrateripoff]

http://www.telegraph.co.uk/finance/mark-carney/10220947/Mark-Carney-set-for-interest-rate-promise-to-lift-economy.html

Mark Carney will on Wednesday reveal the central bank's long-awaited "unconventional policy" that the Chancellor asked the Bank of England to investigate in his March Budget.

An expected commitment to keep rates at their record low of 0.5pc for an extended period will be made alongside the Bank's quarterly update on the UK economic outlook.

Economists predict the Bank will upgrade growth for this year a little above its 1.2pc forecast in May and revise down inflation for 2013.

It will be the second time in a row the Bank has improved the economic outlook in its three-monthly Inflation Report, drawing a line under the years of downgrades since the 2008 recession struck.

I can't wait for this "unconventional policy" I'm betting it will involve giving the bankers more free money to speculate with and bid up asset prices. I mean what could possible go wrong, market manipulation of prices it's a constant success throughout history.

[SleepyHead]

So they will continue to steal from savers, for as long as it takes to bail out reckless borrowers..... while encouraging said reckless borrowers to borrow more.

Total idiots.

Edited August 4, 2013 by sleeping dog

[billybong]

Mark Carney set for interest rate promise to lift economy

The Bank of England is expected to raise its growth forecasts and lower its inflation outlook this week as the Governor unveils a radical new commitment to low rates in what is likely to be a further boost for the recovery.

Mark Carney will on Wednesday reveal the central bank's long-awaited "unconventional policy" that the Chancellor asked the Bank of England to investigate in his March Budget.

Whaat!?- "the radical new commitment" that still hasn't worked after 6 years already. So "unconventional". Give him a bonus!

It gets more like The Mash every time.

At least they didn't say "innovative".

Edited August 4, 2013 by billybong

[cybernoid]

Whatever we can come up with, it will be more ridiculous.

It might be time to join the madness. Drink some of keisers kool aid, come on in, the insanity is nice and insane.

When everyone else is insane are you relatively insane for being sane?

[billybong]

The policy of "pre-commitment" will be a revolutionary new step for the central bank, if it delivers what economists expect – a similar pledge to Mr Carney's promise to Canadians in 2009 that rates would be held steady for a year.

Revolutionary?

Painting the country into a corner more like. For goodness sake couldn't they find anyone better than Carney.

[SpectrumFX]

0% rates?

[thecrashingisles]

"I'm off to the Bahamas. See you all in two years and don't touch anything while I'm gone."

[billybong]

Last week, Sir John Gieve, Dame DeAnne Julius and Charles Goodhart – all former Bank rate-setters – said the recovery had more or less reached "escape velocity".

So stand well clear of the launch zone.

Edited August 4, 2013 by billybong

[Bland Unsight]

I can't wait for this "unconventional policy" I'm betting it will involve giving the bankers more free money to speculate with and bid up asset prices. I mean what could possible go wrong, market manipulation of prices it's a constant success throughout history.

Let's see where lending to individuals, FX and the UK 10 year gilt yield are at 12-18 months down the line. If lending stays flat, Sterling weakens and yields continue to rise, then house prices outside London will continue to fall.

For all the talk, almost all the FLS lending is 4% APR when fees are rolled in and SVRs are 4.4% and steady. It's not got any cheaper to borrow since 2009, regardless of the largely information free fanfare about low rates. FLS has just improved the interest rate spreads between funding and lending at the banks and building societies. However with Yorkshire offering a 10 year fix at 4%, we're probably just lining up the last of the lenders not already rolled into one of the giants for a crisis in about 5-7 years time - Savings and Loan style. Savings rates may still be at 2% in 10 years time, but I'm dubious about the wisdom of placing a massive bet on it.

I think that there is a narrative being sold here, which I'm not buying. Is Mr Carney, or anybody in a position to guarantee that we'll stay at these rates for 25 years? Of course not. If keeping rates low sends Sterling lower then the inflation of imported goods and commodities will have the same effect on household finances as mortgage cost rising, (unless wages also inflate, which they aren't doing).

I'm with the banks on this one, borrowing at anything much less than 75% and at low income multiples is extremely bold. If you extinguish your savings when you hand over your deposit, you're really committing to Mr Carney's ability to control mortgage rates over the next five parliaments. I'm sure he's smart and earnest. He may even be decent, but I doubt he can control the future.

[winkie]

Let's see where lending to individuals, FX and the UK 10 year gilt yield are at 12-18 months down the line. If lending stays flat, Sterling weakens and yields continue to rise, then house prices outside London will continue to fall.

For all the talk, almost all the FLS lending is 4% APR when fees are rolled in and SVRs are 4.4% and steady. It's not got any cheaper to borrow since 2009, regardless of the largely information free fanfare about low rates. FLS has just improved the interest rate spreads between funding and lending at the banks and building societies. However with Yorkshire offering a 10 year fix at 4%, we're probably just lining up the last of the lenders not already rolled into one of the giants for a crisis in about 5-7 years time - Savings and Loan style. Savings rates may still be at 2% in 10 years time, but I'm dubious about the wisdom of placing a massive bet on it.

I think that there is a narrative being sold here, which I'm not buying. Is Mr Carney, or anybody in a position to guarantee that we'll stay at these rates for 25 years? Of course not. If keeping rates low sends Sterling lower then the inflation of imported goods and commodities will have the same effect on household finances as mortgage cost rising, (unless wages also inflate, which they aren't doing).

I'm with the banks on this one, borrowing at anything much less than 75% and at low income multiples is extremely bold. If you extinguish your savings when you hand over your deposit, you're really committing to Mr Carney's ability to control mortgage rates over the next five parliaments. I'm sure he's smart and earnest. He may even be decent, but I doubt he can control the future.

This is true.......this will affect everyone not just the indebted.......fuel and food prices will rocket, our pound will crash to the ground through lack of global confidence.

Edited August 4, 2013 by winkie

[@contradevian]

So stand well clear of the launch zone.

I do miss cignio, think that was his name, it seems like years ago, in fact it was years ago!

[Errol]

Low interest rates are effectively signing the death warrant of many nations. There is no escape from what is coming.

[Ash4781]

Will this mean the monthly MPC meeting gets abolished ? Seems a tad pointless.

[Gigantic Purple Slug]

Let's see where lending to individuals, FX and the UK 10 year gilt yield are at 12-18 months down the line. If lending stays flat, Sterling weakens and yields continue to rise, then house prices outside London will continue to fall.

For all the talk, almost all the FLS lending is 4% APR when fees are rolled in and SVRs are 4.4% and steady. It's not got any cheaper to borrow since 2009, regardless of the largely information free fanfare about low rates. FLS has just improved the interest rate spreads between funding and lending at the banks and building societies. However with Yorkshire offering a 10 year fix at 4%, we're probably just lining up the last of the lenders not already rolled into one of the giants for a crisis in about 5-7 years time - Savings and Loan style. Savings rates may still be at 2% in 10 years time, but I'm dubious about the wisdom of placing a massive bet on it.

I think that there is a narrative being sold here, which I'm not buying. Is Mr Carney, or anybody in a position to guarantee that we'll stay at these rates for 25 years? Of course not. If keeping rates low sends Sterling lower then the inflation of imported goods and commodities will have the same effect on household finances as mortgage cost rising, (unless wages also inflate, which they aren't doing).

I'm with the banks on this one, borrowing at anything much less than 75% and at low income multiples is extremely bold. If you extinguish your savings when you hand over your deposit, you're really committing to Mr Carney's ability to control mortgage rates over the next five parliaments. I'm sure he's smart and earnest. He may even be decent, but I doubt he can control the future.

IMO only the largest economies can give forward guidance. US, maybe the EU. China and Japan maybe below the threshold. The UK economy is more influenced by what the world does than we influence the world.

So forward guidance for the UK is useless. Unless it is of the form "we will not raise rates unless the US raises rates/some external event forces us to raise rates", which everyone knows anyway.

[“Nasty Piece of work”]

The UK does not play music, but dances and reacts to whatever is on. Like the Dave and the Referendum, George can promise whatever he likes, the truth is they will, as the ONLY goal (however unachievable) is to get re-elected.

[interestrateripoff]

I think that there is a narrative being sold here, which I'm not buying. Is Mr Carney, or anybody in a position to guarantee that we'll stay at these rates for 25 years? Of course not. If keeping rates low sends Sterling lower then the inflation of imported goods and commodities will have the same effect on household finances as mortgage cost rising, (unless wages also inflate, which they aren't doing).

The only way to guarantee a mortgage rates for the long term would be to promote 25 / 30 year mortgages with a fixed rate. How many could resist buying if you could get a fixed mortgage say at 3%. The central bank could alter it's lending and offer bankers 30 year deals at 0.5%.

In fact I'm surprised we haven't seen this type of movement.

Edited August 4, 2013 by interestrateripoff

[winkie]

I do miss cignio, think that was his name, it seems like years ago, in fact it was years ago!

Found this...not read it though.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=50411&hl=%20100%%20%20guaranteed&st=0

[oracle]

So they will continue to steal from savers, for as long as it takes to bail out reckless borrowers..... while encouraging said reckless borrowers to borrow more.

Total idiots.

this is a regulatory problem,not a fiscal one.

their buddies have insisted on "big is beautiful",and all the small upstarts(ie the microsofts and apples of the future) are having the drawbridge pulled up before them.ch the same manner as the kids of the future are being mugged by land-grabbing aristocrats and overlords....seen that one before, that was the primary cause of the french revolution.

romanticise it all you like, but it was actually the initial land-grab that caused the peasants revolt and the backlash....but the aristocrats still seem to have not gotten the message.

..I should apply exactly the same logic to our "jacobite" element......they need to re-read the instruction manual and learn that the job of the king is NOT ultimate lord and master, but as an administrator.......hoarding of land,goods and all that jazz is strictly forbidden.

....the backlash this time is really,truly french revolution on steroids....globally.

.....well, like cancer, this old behemoth metastacises,and is in desperate need of a transplant.

if they realise their errors and enact a dose of "quaker capitalism"...ie the workers get a percentage of their labour(not food stamps,hand me downs etc,but real assets..ie homes, food,energy etc), we can still achieve peace.

if they do not every single one of them and their families will be hunted down and exterminated from whichever far-flung corner of the globe they have chosen to hide themselves,and they will be on the recieving end of something so utterly horriffic that they themselves will be BEGGING for transportation and lifetimes of servitude for them and their offspring as an alternative.

(basically old testament wrath-of-god type stuff........one third of you will perish in the fire, one third by the famine, and one third I will scatter to the four winds....and I will draw out the sword after them)

frankly I think this is probably the only way they are going to get the message.

Edited August 4, 2013 by oracle

[The Generation Game]

I do miss cignio, think that was his name, it seems like years ago, in fact it was years ago!

Dear, oh dear, Steed. Do you not remember the thread where it was suggested that he was the "Comptroller General of the National Audit Office"?!?

[@contradevian]

Dear, oh dear, Steed. Do you not remember the thread where it was suggested that he was the "Comptroller General of the National Audit Office"?!?

Missed that one.

[Eddie_George]

Will this mean the monthly MPC meeting gets abolished ? Seems a tad pointless.

Who would say no to free tea and biccies and a chinwag every month?

[monks]

NEGATIVE INTEREST RATES

[fluffy666]

NEGATIVE INTEREST RATES

I want to be paid for having a mortgage. Seems fair enough, for a given value of 'fair'

[wonderpup]

If keeping rates low sends Sterling lower then the inflation of imported goods and commodities will have the same effect on household finances as mortgage cost rising, (unless wages also inflate, which they aren't doing).

This is the doublebind scenario- no way out. The elites have done such a good job of extracting wealth from the great unwashed they have endangered the viability of the system.

[zugzwang]

The only way to guarantee a mortgage rates for the long term would be to promote 25 / 30 year mortgages with a fixed rate. How many could resist buying if you could get a fixed mortgage say at 3%. The central bank could alter it's lending and offer bankers 30 year deals at 0.5%.

In fact I'm surprised we haven't seen this type of movement.

Because they could only be financed in one of two ways 1. Govt 2. Wholesale markets. The UK govt has already accumulated a 1.3 trillion pound national debt holding up house prices, the capacity to expand that debt still further without direct monetisation is severely limited.

RBS has a ~£1 trn toxic mortgage book, a significant chunk of which needs to be rolled over each and every month via the wholesale markets. There's not a snowball's that they or any other UK bank could borrow from the markets at a rate that would make whole term fixes @ 3.0% profitable. Even in the US, despite Benny's QE infinity, the 30 yr is back up to 4.39%.

.

Edited August 4, 2013 by zugzwang