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Carney Speech

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surprised there isn't a thread on this already...

Carney has just announced that since unemployment has fallen so quickly, he is moving the goalposts again in order to keep interest rates low. Mumbled something about spare capacity, and inflation undershooting. looks like it's turning Japanese...

Some great questions, from Ed Conway and Larry Elliot, so far.

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Of course he does!

There's no end to the lengths these shysters will go to prop up feckless debtors.

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http://www.bankofeng...4febeconrec.pdf

http://www.bankofeng...014/ir1401.aspx

Monetary policy as the economy recovers

This box provides further guidance on the setting of monetary policy once the unemployment threshold has been reached.

•The MPC sets policy to achieve the 2% inflation target, and, subject to that, to support the Government's economic policies, including those for growth and employment.

•Despite the sharp fall in unemployment, there remains scope to absorb spare capacity further before raising Bank Rate.

• When Bank Rate does begin to rise, the appropriate path so as to eliminate slack over the next two to three years and keep inflation close to the target is expected to be gradual.

• The actual path of Bank Rate over the next few years will, however, depend on economic developments.

Even when the economy has returned to normal levels of capacity and inflation is close to the target, the appropriate level of Bank Rate is likely to be materially below the 5% level set on average by the Committee prior to the financial crisis.

• The MPC intends to maintain the stock of purchased assets at least until the first rise in Bank Rate.

• Monetary policy may have a role to play in mitigating risks to financial stability, but only as a last line of defence if those risks cannot be contained by the substantial range of policy actions available to the Financial Policy Committee and other regulatory authorities.

Edited by R K

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I posted a thread on this about 9 am but it was moderated, not sure why.

Looks like low base rates are here for the long term, in any case.

Carnage is more or less conceding the point here. Interest rates will remain at 0.5% until he f**** off back to Canadia. :angry:

11.10 Will rates ever return to normal levels? Carney says possibly, but it's a long, long, way away

quotes_1817837a.gifIt depends on what the broader monetary response. If we end up in a world of closing barriers that will have a material impact on the longer term path of rates. I wouldn't be a pessimist about the ability to return to (normal) rates. That is well beyond the forecast horizon of the Bank of England.

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Only a matter of time before they extend QE even further.

If they want to keep interest rates low over the long term, the only way they'll do that is by buying their own bonds to suppress yields.

After all, it is the miracle cure. Just print money and all will be well, that is now the mantra.

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Interested to hear from the "I'm buying popcorn for when rates go to the moon in 2014" brigade.

These rates are the new paradigm, and it was obvious this statement was coming as for the last few months the media & commentators have been doing their best to scare people onto slowly inflating fixed rates, saying we are about to see a rate hike.

Watch mortgage rates now FALL again over the next few months... yawn, yawn, rinse and repeat

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Carnage is more or less conceding the point here. Interest rates will remain at 0.5% until he f**** off back to Canadia. :angry:

11.10 Will rates ever return to normal levels? Carney says possibly, but it's a long, long, way away

quotes_1817837a.gifIt depends on what the broader monetary response. If we end up in a world of closing barriers that will have a material impact on the longer term path of rates. I wouldn't be a pessimist about the ability to return to (normal) rates. That is well beyond the forecast horizon of the Bank of England.

As many of us have said here for a long time. They are trapped. Interest rates will NEVER rise and QE will continue for ever (and even increase - regardless of what name they give to it).

Then there will be total collapse.

No other way out now.

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Interested to hear from the "I'm buying popcorn for when rates go to the moon in 2014" brigade.

These rates are the new paradigm, and it was obvious this statement was coming as for the last few months the media & commentators have been doing their best to scare people onto slowly inflating fixed rates, saying we are about to see a rate hike.

Watch mortgage rates now FALL again over the next few months... yawn, yawn, rinse and repeat

It's all a side-show to the Fed. If they continue down the tapering, tightening, interest rate rise path then the BoE will follow like a puppy behind its master.

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http://news.sky.com/story/1210397/bank-of-england-raises-growth-forecast-by-21-percent

"The Bank of England governor has announced an increase in the forward growth forecast for the British economy to 3.4%, signalling good news for mortgage holders."

What I think of these people is unprintable.

****s

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Even when the economy has returned to normal levels of capacity and inflation is close to the target, the appropriate level of Bank Rate is likely to be materially below the 5% level set on average by the Committee prior to the financial crisis.

This is surely the most interestin bit.

Rates AFTER economy has returned to normal will likely be materially below 5%.

So the next recession will start with rates below were they were last time. Long-term disinflation trend continues...........

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Yes the long-term average for interest rates is dropping though in the short term the growth rate forecast has been raised. I think we need that chart of recovery from recessions. Presumably still loads of spare capacity. Well the bank thinks so. If they are wrong though they'll have to move fast.They said they would move slowly. ..

Push for higher wage settlements :)

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Yes the long-term average for interest rates is dropping though in the short term the growth rate forecast has been raised. I think we need that chart of recovery from recessions. Presumably still loads of spare capacity. Well the bank thinks so. If they are wrong though they'll have to move fast.They said they would move slowly. ..

Push for higher wage settlements :)

Push for devaluation of everything you ever worked for, great idea.

This is the final straw for me. We are being robbed blind and people suck it up.

The bankers have got off scot free with what they did up to 2007 and now the government is trying to do it all again.

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http://www.telegraph.co.uk/finance/business-news-markets-live/10632550/Bank-of-England-Inflation-Report-live.html

Bank: Interest rate rise in 2015 pencilled in

12.10 So when will interest rates actually rise? This table from the Bank of England may provide some clues. It shows what will the market expects to happen to rates, sterling, and commodity prices if things pan out as expected.

predictions_2819713a.jpg

Howard Archer, chief UK and European economist at IHS Global Insight, says today's report will not have changed expectations about a rate rise.

Quote The inflation forecasts given in the Bank of England’s Quarterly Inflation Report do give a decent clue as to where interest rates are likely to go. Based on market expectations that interest rates will start to rise around the second quarter of 2015 and will reach 2.0pc by 2017, consumer price inflation is forecast by the Bank of England to be at 1.9pc in both two years and three years’ time.

This is only marginally below the Bank of England’s medium-term target rate of 2.0pc and suggests that it is a realistic profile for interest rates.

they and the meeja are saying a rise in 2015, I don't care if there is any truth in this, it gets it into the consciousness of the public.

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As many of us have said here for a long time. They are trapped. Interest rates will NEVER rise and QE will continue for ever (and even increase - regardless of what name they give to it).

Then there will be total collapse.

No other way out now.

Staggering. Completely staggering. Mind-blowing. :rolleyes::rolleyes:

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Push for devaluation of everything you ever worked for, great idea.

This is the final straw for me. We are being robbed blind and people suck it up.

The bankers have got off scot free with what they did up to 2007 and now the government is trying to do it all again.

I agree with you. It is just absolutely mind-blowing.

Most people don't understand -- and they don't care either.

We live in a depressing world. :angry: :(

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Yes the long-term average for interest rates is dropping though in the short term the growth rate forecast has been raised. I think we need that chart of recovery from recessions. Presumably still loads of spare capacity. Well the bank thinks so. If they are wrong though they'll have to move fast.They said they would move slowly. ..

Push for higher wage settlements :)

I suspect the short term growth rate has been lifted because of the likely content of Osborne's Spring budget which the Bank will have been briefed about in advance. Osborne's obviously going on an spending blow-out, presumably with the fire-sale of Lloyds and some additional house price ramping thrown in for good measure.

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they and the meeja are saying a rise in 2015, I don't care if there is any truth in this, it gets it into the consciousness of the public.

It's all about sentiment... a rise is always round the corner. This is for the markets benefit, not the public. The average man in the street (outside of this website) is not thinking about rates climbing in 2016.

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Interested to hear from the "I'm buying popcorn for when rates go to the moon in 2014" brigade.

These rates are the new paradigm, and it was obvious this statement was coming as for the last few months the media & commentators have been doing their best to scare people onto slowly inflating fixed rates, saying we are about to see a rate hike.

Watch mortgage rates now FALL again over the next few months... yawn, yawn, rinse and repeat

Im not sure anyone on here expects any government/central bank to raise rates of their own volition.

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As long as you are getting wage inflation (say 5%+) you are ok, you can survive the downturn. You certainly do not get any in savings. Basically the solution they decided upon at the start of the crash to prevent the crash in HPI was to inflate the prices of everything else until they are proportionate to HPI. So a £160k average house does not look so stark when the loaf of bread is £2 - £5 (it may overshoot a tad). The only problem is not everyone is getting a pay rise, and the retired are getting a haircut on their savings to pay for it all.

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