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Interest Rates May Rise Next Year, Says Bank Of England Chief Economist

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http://www.theguardian.com/business/2013/oct/16/bank-of-england-interest-rates-may-rise-next-year

The Bank of England warned that interest rates might rise as early as next year as its chief economist said Threadneedle Street's desire to keep borrowing costs low for several years could be thwarted by a combination of stronger than expected growth and unusually weak productivity.

Spencer Dale, one of the nine members of the rate-setting monetary policy committee, said the UK was currently growing at an annual rate of 3-4% and the Bank could not be certain when it might need to tighten policy.

Following guidance issued by the Bank in August, the City is expecting interest rates to remain on hold at their record low of 0.5% until at least 2015. But Dale said in a Guardian interview that in certain circumstances an increase could happen as soon as 2014.

"What we are clear about is what the state of the economy will be like when we raise interest rates. What we are not as clear about is whether that is two years ahead, three years ahead, or one year ahead. But it is clear that we are thinking of years not months," Dale said.

The Bank said in August that unless there was a risk from inflation or an over-heating property market it would only start thinking about raising interest when unemployment had come down to 7% from 7.7% currently, something it did not expect until 2016. But the recovery in the economy seen since the spring has left many in the City convinced that the Bank will be forced to take action before then.

Anyone with a business on here feel the UK is growing at 3-4%. You must all be doing very well, can't believe people still think we are still stagnating with figures like this being quoted!

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Nope!!

Ticking along pretty much the same as last year!!

Like the news about rates though, the sooner the better.

In some ways I hope a mini HPI does take off so they are forced into raising rates.

It will end all this madness sooner and flush all that nasty debt out of the system!!

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Nope!!

Ticking along pretty much the same as last year!!

Like the news about rates though, the sooner the better.

In some ways I hope a mini HPI does take off so they are forced into raising rates.

It will end all this madness sooner and flush all that nasty debt out of the system!!

That's what they said last year...and the year before that.

Watch what they do, not what they say.

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the UK was currently growing at an annual rate of 3-4%

That'll be down to the reinvigorated manufacturing sector of our rebalanced economy :)

I bet imputed rents are still rising though.

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More bottom covering from the BOE IMPO.

Their intention is to keep IRs low for many years but they are putting out these kinds of statements - Carney in Norwich the other week on mortgage rates - so if they are forced to raise IRs they can say "Well, we told you so! We did warn you!".

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That'll be down to the reinvigorated manufacturing sector of our rebalanced economy :)

I bet imputed rents are still rising though.

Indeed, I'm charging myself a grand a month for living in the house I'm paying a mortgage on. Just think how much richer I'll be if I trerat myself to a 20% rent hike!

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A friend popped in to her local branch of Lloyds yesterday to ask advice on putting £20K into a fixed term bond. The advisor told her to hold on until january because interest rates will be higher then.

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As the Count says.. watch what they do not what they say.

The policy of quantitative easing was launched alongside an implicit PR campaign which pushes the message that QE is temporary and that rates are always about to be increased in a year or so. You can hear members of the MPC preaching this message whenever they speak in public. Presumably the aim of this campaign is to promote stability and prevent an uncontrolled run on sterling (although the government is open about encouraging a low pound to help exports). Central bankers are increasingly happy to say whatever is required to keep a particularly market trading within "acceptable levels". This applies to gilt yields, exchange rates etc. and to a lesser extent to equities.

It'sprobably safe to say that

1. QE will NEVER be unwound, and more asset purchases will be authorised whenever the next recession/crisis comes along

2. interest rates will not be increased unless the BoE has its hand forced by extreme external events

Dale is one of the more "hawkish" MPC members but I can't help thinking that if the hawks ever look like winning the vote they will be quietly replaced by doves!

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you cant do a cash flow forecast that doesnt show you are a millyonaire in 30 years.

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A friend popped in to her local branch of Lloyds yesterday to ask advice on putting £20K into a fixed term bond. The advisor told her to hold on until january because interest rates will be higher then.

No offence to these advisors - but they don't have a clue about this sort of stuff.

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http://www.theguardian.com/business/2013/oct/16/bank-of-england-interest-rates-may-rise-next-year

Anyone with a business on here feel the UK is growing at 3-4%. You must all be doing very well, can't believe people still think we are still stagnating with figures like this being quoted!

3-4% = 30-40% for the 1% and minus3- minus 4% for everyone else.

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The only way BoE would hike rates is if wage rates for the plebs starts to rise. In fact that wage growth is expected as UK services sector just had its best quarter in 16 yr.

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They also like to seem to be helping the incumbent government - no matter which party.

As the eu election and the general election are rapidly approaching Cameron is also bulling on about the growth. He was bragging about current UK growth (the growth that seems to result in more shop closures etc) just a couple of days ago - next he'll be telling Germany how to run their economy.

The BoE just goes along with it. It was the same with Brown as the 2010 general election approached, Blair before him etc.

It's a prediction by the BoE so the chance of any part of it being near accurate is virtually nil - and it doesn't even have to be accurate as they are never taken to task for their inaccuracy.

Edited by billybong

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The only way BoE would hike rates is if wage rates for the plebs starts to rise. In fact that wage growth is expected as UK services sector just had its best quarter in 16 yr.

Or when the tories realise the savers of the country are all tory voters and have had enough of being robbed so threaten to vote UKIP.

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"What we are clear about is what the state of the economy will be like when we raise interest rates. What we are not as clear about is whether that is two years ahead, three years ahead, or one year ahead. But it is clear that we are thinking of years not months," Dale said.

etc

They are clear about nothing.

The interview is full of ifs and buts along with a lot of misdirection and attempts to convince people that they have a clue about what they're doing.

In other words the usual stuff.

Apart from that there's the pretence all round that the economy is recovering STRONGLY - when looking around shops are still closing etc but this time with little or no publicity. It looks as if Brown's scorched earth policy was kids stuff compared to the current lot as at least there still seemed to be some small fragments of believability in the recovery stats being published in those days.

Edited by billybong

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More bottom covering from the BOE IMPO.

Their intention is to keep IRs low for many years but they are putting out these kinds of statements

Its all about scaring people onto fixed rates so the banks can make more £

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3-4% annualised GDP growth is entirely consistent with the credit impulse from HTB1. It remains to seen whether HTB2 can keep credit growth accelerating into 2014. I personally don't believe it will but Osborne and Carney may be able to use the slowing global economy as a figleaf. I think Osborne will want a >2% GDP print going into the GE to establish his economic credibility with an obviously sceptical electorate. From the hints we've been given already, I'm sure he's got lots of lovely capex to bring forward. The worry for him, like Brown in 2003, is that the housing bubble will capitulate before he gets to the line.

.

Edited by zugzwang

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3-4% annualised GDP growth is entirely consistent with the credit impulse from HTB1. It remains to seen whether HTB2 can keep credit growth accelerating into 2014. I personally don't believe it will but Osborne and Carney may be able to use the slowing global economy as a figleaf. I think Osborne will want a >2% GDP print going into the GE to establish his economic credibility with an obviously sceptical electorate. From the hints we've been given already, I'm sure he's got lots of lovely capex to bring forward. The worry for him, like Brown in 2005, is that the housing bubble will capitulate before he gets to the line.

I posted on here the other day that i thought Osbrown has cum too soon.

This could really backfire on the *******.

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3-4% annualised GDP growth is entirely consistent with the credit impulse from HTB1. It remains to seen whether HTB2 can keep credit growth accelerating into 2014. I personally don't believe it will but Osborne and Carney may be able to use the slowing global economy as a figleaf. I think Osborne will want a >2% GDP print going into the GE to establish his economic credibility with an obviously sceptical electorate. From the hints we've been given already, I'm sure he's got lots of lovely capex to bring forward. The worry for him, like Brown in 2003, is that the housing bubble will capitulate before he gets to the line.

.

My suspicion is that one of the aims is that they want FTBs to use HTB2 to buy houses that need some TLC but can't if they have to use all their savings for deposit...

Hence HTB2 allows them to spend 5-10% of the value of the property on doing it up which is good for those in the building trade (and employment + GDP). A home that is done up has a higher value after work is done on it assuming no other market changes in the meantime so the gov't / lender should be less likely to get stung if it gets repo'd.

Edited by koala_bear

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Bankrupt of england = full of shit. Trundle out one member after another to spout some excuse. promise,pron ouncement.

Talentless, irresponsbile, troughing m cvili unservants doin g others business and prentending to be otherwise. Not worth the paper they print their money and certianly not the coimage which they have reduced to the lowest value scrap metal money can buy. You'd be better off buying junk copper tube etc rather than coinage from this discredited mob.

Edited by onlyme2

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Carney is boxed in. If they have messed up their calcs eg spare capacity calcs and inflation jumps with growth then raising rates will destroy Carney's credibility. He would have to go!

I do worry about some of the ONS stats that are released. For example retail sales, gdp. At one time the mpc started doing their own stats!

Edited by Ash4781

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Carney is boxed in. If they have messed up their calcs eg spare capacity calcs and inflation jumps with growth then raising rates will destroy Carney's credibility. He would have to go!

I do worry about some of the ONS stats that are released. For example retail sales, gdp. At one time the mpc started doing their own stats!

British Gas up almost 10% - how will they keep that out of the inflation figures?

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