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Carney Junks His Forward Guidance - Ft

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Just heard on the news that Carney now thinks that unemployment at 7% is not a strong enough indicator on it's own to make a rate rise decision. Perhaps the Job centre staff have moved too many people onto self employed tax credits and back to work schemes too quickly for his liking or maybe Dave popped in and just said no.

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Last thing in the article....

And i thought the BOE was supposed to be independent :rolleyes:

What we really need to look for is what they are doing with their own pension pot. Have they started moving most of it out of index linking funds yet . . .

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I'm not sure it's as clear as it looks.

They locked themselves in to a really narrow target - it was naive put possibly intended so they could make the decision look arms-length and non-political when it came.

However they've got an unusual 'recovery' situation:

1. Employment is up, possibly because it was overdone in the recession

2. They've got indicators from China and elsewhere that things might be going south again

3. There is little investment from business occurring

4. The 'boom' headlines are coming from a few postcodes and cash property transactions over 900K - it's not a national phenomenon

The wider issue is that putting IR up before everyone else does can smash any recovery to pieces.

I suspect he's going to do something else to throw cold-water on London property boom - and they'll do put IR up to 0.55% next year

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And i thought the BOE was supposed to be independent :rolleyes:

What we really need to look for is what they are doing with their own pension pot. Have they started moving most of it out of index linking funds yet . . .

+1

That indicator was 100% correct first time round

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I'm not sure it's as clear as it looks.

...

4. The 'boom' headlines are coming from a few postcodes and cash property transactions over 900K - it's not a national phenomenon

??

How could the boom possibly only be restricted to cash purchases? Cash transactions don't occur in some kind of isolated parallel universe.

Have you checked the statistics linked from the front page of this website?

Here is an example from Nationwide:

(Nationwide provides 'mortgages')

Dec_2013.pdf 123kB (right click, save as)

There is a graph in there showing the increases above inflation, and above wage inflation, across the country.

259lcw6.png

.

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From the bbchttp://www.bbc.co.uk...siness-25868380"

The Bank was not expecting the rate to fall to 7% for another two years."Well, there you have it, it sounds like they were actually working on a time base rather than a target, the seem to have picked a target they thought wouldn't happen.

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From the bbchttp://www.bbc.co.uk...siness-25868380"

The Bank was not expecting the rate to fall to 7% for another two years."Well, there you have it, it sounds like they were actually working on a time base rather than a target, the seem to have picked a target they thought wouldn't happen.

So inflation currently on target and near enough unemployment.

I wonder what there house price inflation target is.

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The most least capable central banker of his generation off to a flying start.

He is lucky to come from a country whose property bubble arrived a few years later (and so will burst a few years later) than that of most other first world countries. That is his one and only selling point.

Edited by Dorkins

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From the bbchttp://www.bbc.co.uk...siness-25868380"

The Bank was not expecting the rate to fall to 7% for another two years."Well, there you have it, it sounds like they were actually working on a time base rather than a target, the seem to have picked a target they thought wouldn't happen.

Like I said - the Job centres have moved too many people too quickly onto self employed tax credits schemes. I have lost count of the number of my son's friends who are now self employed yet receive no or little wages - instead get weekly tax credits and housing benefit. It does however allow them to have numerous zero hour contracts in the vain hope they may get a few hours work from one of them.

I don't believe for one second that the unemployment rate is anywhere near 7% - maybe Carney doesn't either.

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IMO raising interest rates by a token 0.5% would give people confidence that there was a real recover, it might also get companies spending money if they think that growth has arrived and the winter is finally over.

Something cynical inside me says that the bankers are happy with the current situation and do not want any real growth (no FIRE related). How can the banks make money a fortune from growth in manufacturing or non FIRE related services?

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Like I said - the Job centres have moved too many people too quickly onto self employed tax credits schemes. I have lost count of the number of my son's friends who are now self employed yet receive no or little wages - instead get weekly tax credits and housing benefit. It does however allow them to have numerous zero hour contracts in the vain hope they may get a few hours work from one of them.

I don't believe for one second that the unemployment rate is anywhere near 7% - maybe Carney doesn't either.

Why doesn't he just say that then? After all, he's independent......... isn't he? :rolleyes:

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Why doesn't he just say that then? After all, he's independent......... isn't he? :rolleyes:

Yes, the guy who was hired by Osborne and can be fired by Osborne is 100% independent of Osborne. The independence of the Bank of England is guaranteed by the UK's excellent unwritten constitution.

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lets see...5 years from the price collapse...3 years bubbling along the bottom with prices gently rising...media attention last year...everyone joining in...prices shooting up.

oh my goodness....we have another classic bubble...only this time when it collapses where do they go?

they really do expect a 2 or 3 year debt bubble...you can see why the have promised limitless funds to banks.

its a bubble on a bubble!

quick, buy before you kiss out.

Edited by TheCountOfNowhere

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Anyone else watching Carney now?

'we may start thinking about starting to think about thinking whether 7 per cent is a target below which we'll think about whether to start thinking.'

That's Mr Magoo's Forward Guidance.

It's Hope to Be Lucky Forward Guidance.

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Anyone else watching Carney now?

'we may start thinking about starting to think about thinking whether 7 per cent is a target below which we'll think about whether to start thinking.'

Did he really say that ?

What sort of people do we have running out country ?

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So BOE governors first attempt at forward guidance falls flat on its face. Credibility gone, how can anyone believe him now.

Just like merv he seems to be a politically motivated governor, moving the goalposts helps the Tories, just a token gesture of looking at the need or bumping to 0.55% would have proven his independence.

I expect interest rates will rise when labour win.

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