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TheCountOfNowhere

Carney: Bank In No Rush To Raise Rates

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In the CP inflation forecast inflation rises to the 2% at the two year. I am not convinced by that as it is trending downwards. I expect to surprise to the downside. They write that there is quite abit (1% ish gdp) spare capacity so I have no clue where the inflation is going to come from.

Edit: they are covered as prices go right down to deflation in the fan.

Edited by Ash4781

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They know that the new mortgage restrictions will dampen prices anyway, they don`t want the panic associated with rising rates added to the mix. They will hold rates until forced to raise by forces beyond their control I think.

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The Bank of England .... pledges housing market action.

My take on this is the BOE are admitting that there is a problem now, here and today but are refusing to do anything about it until a later date.

Why not do something today? This week? Impose maximum LTV or salary multiples, it's going to take a couple of days to pass new legislation to do that.

It's because they are not going to take any action.

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He's given clear forward guidance that his word shouldn't be trusted so on that basis you should expect a hasty rate hike.

We will raise rates when employment goes below 7%...No we wont.

We will raise rates when the economy recovers...No we wont.

We're in no hurry to raise rates,......

I think there is only one reason he wont raise raises because his banker chums are happy with the new London based housing bubble....what can go wrong.

The London mega bubble wont make it to the end of the year.

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The headline growth figures are entirely misleading. The UK economy is on its knees. Our debts our now so vast and our debt trajectory so perilous that the BoE believes even a token 0.25% hike threatens to collapse the bubble. There will be no interest rate rises this side of a hyperinflationary default. In fact, a massive expansion of the QE program is what's coming next just as soon as the GE is out of the way.

PS It doesn't matter who you vote for.

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On the prospect of a rate rise Mr Carney said: "As time has moved on and the recovery has been sustained, the economy has edged closer to the point at which Bank rate will need gradually to rise.

"The exact timing will inevitably be the subject of considerable speculation and interest."

He said the answer would depend on the progress of the economy and in particular the measure of "slack" or spare capacity and the inflation outlook.

"Securing the recovery is like making it through the qualifying rounds of the World Cup. That is an achievement, not the ultimate goal.

"The real tournament is just beginning and its prize is a strong, sustained and balanced growth."

So that's the so called "Forward Guidance. The Forward Guidance that was going to be so clear when he got the job. Now he's back to talking in riddles just like the previous lot and forward guidance has degenerated into likening recovery to making it through the qualifying rounds of the World Cup :rolleyes:

If that's the case then the UK economy is in a terrible state, there's no real recovery and in 4 years time it'll still be no better - despite all the media hype and the current attempts to pretend otherwise.

Edited by billybong

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The headline growth figures are entirely misleading. The UK economy is on its knees. Our debts our now so vast and our debt trajectory so perilous that the BoE believes even a token 0.25% hike threatens to collapse the bubble. There will be no interest rate rises this side of a hyperinflationary default. In fact, a massive expansion of the QE program is what's coming next just as soon as the GE is out of the way.

PS It doesn't matter who you vote for.

I'm not bothered about base rates, so long as mortgage rates rise, or criteria becomes more stringent (hopefully already), and there's got to come a point where borrowers fall away from wanting the levels of debt. Cost of funding rise and better rates offered to savers.

Sort of bugs me that BoE now, after all this time, boom and reflation years, suggest they will wield some power to remove some heat out of market, when perhaps full hpc was about to hit by itself anyway.

It suggests BoE they also have the authority to put a stop to falling values, as and when they come, and owners will look at them to do so. When BoE decides what market level prices should be (stupidly expensive). FLS stoppage (mortgages) only just about to feed through, MMR just a week or so out, US taper.

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I'm not bothered about base rates, so long as mortgage rates rise, or criteria becomes more stringent (hopefully already), and there's got to come a point where borrowers fall away from wanting the levels of debt. Cost of funding rise and better rates offered to savers.

Me neither, see my earlier thread about saving rates....mortgage rates are mostly high already unless you are willing to sign away a massive chunk of money over to the bankers ( no thanks, :D ). It's still the FLS in my book that's caused this miracle housing recovery ( aka crack up boom ) the banks were handing out money government like there was no tomorrow last year. Witht he high rates we need sensible lending ( MMR ) and lending based on savings not the magic money printing machine.

As my dear old dad said...money doesn't grew on tress it's magicked into existence on a computer keyboard.

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How can Carney raise rates when his boss is deliberately stoking house price rises?

I’m the first person to say we must be vigilant about avoiding the mistakes of the past. That’s why I gave powers to the Bank of England to stop dangerous housing bubbles emerging.

But too many people are still being denied the dream of owning their own home. So instead of starting the second phase of Help to Buy next year, we’re starting it next week.

There are some people - many living in the richest parts of London - who say we shouldn’t be doing these things. I have this to say:

Take you arguments down the road to Nelson or Colne, where house prices have fallen for the past five years. Take your arguments to Bury, or Morecambe, where young working couples are still living at home with their parents.

Take your arguments to our great towns and cities where there are families who have saved for years, earning decent salaries, who can afford the mortgage repayments but can't possibly afford the deposit being asked by the banks these days.

Take your arguments to those families and say: “This policy is not right. You shouldn't be allowed to get your home.”

I tell you what they'll say back: “It's alright for you. You've got your own home. We’ve been saving for years. What about us?”

I know whose side this Party is on. We are the party of aspiration. The housebuilding party of Macmillan.

The party of Thatcher's right to buy. And now the party of David Cameron’s Help to Buy. We are the party of home ownership and we’re going to let the country know it.

http://www.politics.co.uk/comment-analysis/2013/09/30/george-osborne-s-conference-speech-in-full

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MMR seems overrated to me. I ported £234k (sub 3%) between 2 mainstream lenders on Monday. Only basic questions and usual id/proof of income were required. Wife is self employed (Ltd) with 1 employee and a couple of contractors but only has a couple of years post NHS proof of income. We're south coast not London. To be honest MMR seems more lip service than anything - i think most mainstream lenders were operating in the same way previous to implementation.

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In the CP inflation forecast inflation rises to the 2% at the two year. I am not convinced by that as it is trending downwards. I expect to surprise to the downside. They write that there is quite abit (1% ish gdp) spare capacity so I have no clue where the inflation is going to come from.

Edit: they are covered as prices go right down to deflation in the fan.

It would be amazing indeed if we don't trend downwards when there is a massive commodities glut and China and the Eurozone see the UK consumer as the ideal dumping ground for world over capacity. We have also seen a worldwide energy and food crash......how long special dispensation can carry on for UK dairy farmers is anybody's guess...when Tesco etc. could pick up milk from the continent for next to nothing.

Without competition around UK services boosted by the housing market we would be in a deflationary grip already. Whilst we teach our kids useful stuff like Human Geography at Uni I guess plumbers can keep inflating and keep the inflation rate on the right side of zero.

Same situation as 1999-2003, a worldwide commodities slump and the muppets at the MPC sit on their hands whilst assets inflate.

Edited by crashmonitor

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The headline growth figures are entirely misleading. The UK economy is on its knees. Our debts our now so vast and our debt trajectory so perilous that the BoE believes even a token 0.25% hike threatens to collapse the bubble. There will be no interest rate rises this side of a hyperinflationary default. In fact, a massive expansion of the QE program is what's coming next just as soon as the GE is out of the way.

PS It doesn't matter who you vote for.

Agreed - there's no way back. The 'recovery' is built solely on low interest rates and loose money from the central banks. Stopping or scaling that back would precipitate the long delayed crash from 2008 on an even more massive and catastrophic scale. There's simply no way that those running the show will do that.

This ends when there's either a black swan external shock or the financial system becomes so borked that it starts to malfunction in unpredictable ways. Until then, more and more cheap money will be created to keep it going.

Of course, we could always arrange a war, which frequently seem to come along when big economies run into trouble and there are problems securing scarce resources. No sign of one of those on the horizon though, eh?

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It is fairly clear in my mind that if there is a problem that central bankers think they can fix with printy printy, ZIRP, asset swapping, liquidity injections and other such things, then they will try to fix it.

The only thing that will make the wheels come off is either something that is beyond that - a war perhaps, or when all the bank's actions come home to roost as price inflation, but not wage inflation.

The more the banks do, the bigger the pop is likely to be when it comes

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MMR seems overrated to me. I ported £234k (sub 3%) between 2 mainstream lenders on Monday. Only basic questions and usual id/proof of income were required. Wife is self employed (Ltd) with 1 employee and a couple of contractors but only has a couple of years post NHS proof of income. We're south coast not London. To be honest MMR seems more lip service than anything - i think most mainstream lenders were operating in the same way previous to implementation.

Well if your transaction gets reviewed by the FCA, the lending bank will be found to be in breach of the rules and will get fined.

Edited by Ah-so

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I'd never seen that speech by Osborne before.

It actually makes me feel sick. How can he pretend to be helping people who have 'saved for years' with a policy that just prices them out further? Oh of course we'll all jump on this policy and bridge the gap with a loan from the taxpayer - because money you owe the government isn't like real debt, is it. I think student loans have taught us better than that. And never mind the next generation - we'll just have to give them even larger government loans.

Does he really believe he is helping people? How can a human being live with themselves, inflicting so much misery while telling people it's happiness?

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As for Carney, I at least believe he has a plan, unlike Mervyn King's monthly piteousness of doves, led by the dangerously naive ideologue Blanchflower.

Pity his plan appears to be to do everything possible to prop up the fantasy economy by consistently 'warning' of rate rises or action on housing without actually doing anything. Dancing to the tune coming from Number 11.

These people don't know what a truly functioning economy looks like. All they know how to do is to funnel money onto bank balance sheets and stuff it into the mouths of the already rich. The appearance of growth is all they care about, rather than any actual improvement.

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Lots of stories of a normalising economy in the news and now 6.8% unemployment. One piece college working with long-term unemployed to fill all the vacancies coming up (jobs for all). Most new employment seems to be self-employment - we all know what they means. Reality and mathematics seems to be shouting dissonance at me. Something isn't right. The bigger the lie... It is amazing they have gotten away with it so long.

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It suggests BoE they also have the authority to put a stop to falling values, as and when they come, and owners will look at them to do so. When BoE decides what market level prices should be (stupidly expensive). FLS stoppage (mortgages) only just about to feed through, MMR just a week or so out, US taper.

Lets hope, if they try something like this, that all their powers count for sh*t!

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I’m the first person to say we must be vigilant about avoiding the mistakes of the past. That’s why I gave powers to the Bank of England to stop dangerous housing bubbles emerging.

Oh no you didn't! - not for London.

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Lots of stories of a normalising economy in the news and now 6.8% unemployment. One piece college working with long-term unemployed to fill all the vacancies coming up (jobs for all). Most new employment seems to be self-employment - we all know what they means. Reality and mathematics seems to be shouting dissonance at me. Something isn't right. The bigger the lie... It is amazing they have gotten away with it so long.

Its like the unemployment figures.

For the last 10 ood years they've claimed to be really low, yet the number of people I know who are not working is just too many - unless my entire circle is made up of the local unemployed.

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It would be amazing indeed if we don't trend downwards when there is a massive commodities glut and China and the Eurozone see the UK consumer as the ideal dumping ground for world over capacity. We have also seen a worldwide energy and food crash......how long special dispensation can carry on for UK dairy farmers is anybody's guess...when Tesco etc. could pick up milk from the continent for next to nothing.

Without competition around UK services boosted by the housing market we would be in a deflationary grip already. Whilst we teach our kids useful stuff like Human Geography at Uni I guess plumbers can keep inflating and keep the inflation rate on the right side of zero.

Same situation as 1999-2003, a worldwide commodities slump and the muppets at the MPC sit on their hands whilst assets inflate.

Well the past and near term forecasting (unemployment) has been poor. Their vagueness on interest rate rises does not inspire confidence in their forecasting. What happened to forward guidance? Edited by Ash4781

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