thecrashingisles Posted June 12, 2014 Share Posted June 12, 2014 "There’s already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced. It could happen sooner than markets currently expect." http://www.bankofengland.co.uk/publications/Documents/speeches/2014/speech736.pdf The need for internal balance – to use up wasteful spare capacity while achieving the inflation target – will likely require gradual and limited interest rate increases as the expansion progresses. The start of that journey is coming nearer. Unlike a canoe trip, the quest for economic balance never ends. With economies and markets always moving between equilibria, it is the journey that matters. By working together we can make that journey as pleasant and as prosperous as possible. "Is it time to deploy my macroprudential tools?" Quote Link to comment Share on other sites More sharing options...
FreeTrader Posted June 12, 2014 Share Posted June 12, 2014 Its just talk, talking doesn't change anything. Talking does change things - markets react, short-term rates rise in anticipation. There's no way he would have used those words if there was little prospect of it happening. It suggests more MPC members are moving towards voting for a rate increase. Central banks don't like to surprise the markets, so this is likely expectations management. Quote Link to comment Share on other sites More sharing options...
frederico Posted June 12, 2014 Share Posted June 12, 2014 Carney's economic toolkit is largely comprised of waffle and hope, he won't put up rates anytime soon, he just wants to give the impression the economy is improving. Demand is no where near the level at which it requires dampening. Quote Link to comment Share on other sites More sharing options...
frederico Posted June 12, 2014 Share Posted June 12, 2014 Talking doesn't change reality, may be the short term perception of it which is what he wants. Quote Link to comment Share on other sites More sharing options...
FreeTrader Posted June 12, 2014 Share Posted June 12, 2014 How it's being reported: Bank of England Governor: Interest rates will rise 'sooner than markets expect'Back to normality. The Governor of the Bank of England has signalled tonight that the era of record low interest rates is soon to end. http://www.itv.com/news/2014-06-12/bank-of-england-governor-interest-rates-will-rise-sooner-than-markets-expect/ Bank of England hints at possible rate rise this yearThe governor of the Bank of England, Mark Carney, has signalled that interest rates may rise this year. In a keynote speech, Mr Carney said that a rate rise "could happen sooner than markets currently expect". The consensus among economists was that rates would rise in the first half of next year, or even earlier. BBC economics editor Robert Peston said that although the comments point to an increase this year, any rise "will be small and gradual". http://www.bbc.co.uk/news/business-27825643 Quote Link to comment Share on other sites More sharing options...
The Knimbies who say No Posted June 12, 2014 Share Posted June 12, 2014 "Is it time to deploy my macroprudential tools?" Pretty much sums it up. Quote Link to comment Share on other sites More sharing options...
R K Posted June 12, 2014 Author Share Posted June 12, 2014 (edited) Volatility is too low. Have some volatility - WOOF!! p.s. it's not the first rate rise that matters it's the path thereafter. He wants to kick some volatility into the system, but not too much. Full text of Carney speech here (apols if someone's already linked it up) http://www.bankofengland.co.uk/publications/Pages/speeches/2014/736.aspx My take - he wants a slow and steady rise in the housing market, which enables him to keep rates lower, rather than risk having to use monetary policy to keep a lid on it. Whether that will prove possible with the dearth of supply is moot. Either way, I can't see prices falling much (maybe a zag) absent a recession. Edited June 12, 2014 by R K Quote Link to comment Share on other sites More sharing options...
The Masked Tulip Posted June 12, 2014 Share Posted June 12, 2014 BBC has rising IRs as its second story after Iraq. Explains Vince's stuff to the Beeb first thing this morning. NZ raised their rates overnight. Quote Link to comment Share on other sites More sharing options...
cybernoid Posted June 12, 2014 Share Posted June 12, 2014 I can't see prices falling much (maybe a zag) absent a recession. Preserved for preposterous erity. Another one for your sig? Quote Link to comment Share on other sites More sharing options...
Rain'ard Posted June 12, 2014 Share Posted June 12, 2014 The world cup and Rio provided the light relief at the Mansion House tonight. Am I correct in think that George Osbourn is releasing contaminated brown sites for the plebs, so the well heeled do not have there view of the mountains green that Jeses feet is speculated to walk.. Er before He paddled in the mud at Glastonbury Quote Link to comment Share on other sites More sharing options...
ccc Posted June 12, 2014 Share Posted June 12, 2014 BBC has rising IRs as its second story after Iraq. Explains Vince's stuff to the Beeb first thing this morning. NZ raised their rates overnight. Interesting. NZ is often used to trial things money related. Plastic bank notes and chip and pin for starters. Bilderberg few weeks back. Am I putting two and two together Quote Link to comment Share on other sites More sharing options...
shindigger Posted June 12, 2014 Share Posted June 12, 2014 The world cup and Rio provided the light relief at the Mansion House tonight. Am I correct in think that George Osbourn is releasing contaminated brown sites for the plebs, so the well heeled do not have there view of the mountains green that Jeses feet is speculated to walk.. Er before He paddled in the mud at Glastonbury Simon Jenkins fapping wildly.... Quote Link to comment Share on other sites More sharing options...
Ah-so Posted June 12, 2014 Share Posted June 12, 2014 Interesting. NZ is often used to trial things money related. Plastic bank notes and chip and pin for starters. Bilderberg few weeks back. Am I putting two and two together Australia had plastic bank notes in the mid-90s, well before NZ. Quote Link to comment Share on other sites More sharing options...
The Masked Tulip Posted June 12, 2014 Share Posted June 12, 2014 Interesting. NZ is often used to trial things money related. Plastic bank notes and chip and pin for starters. Bilderberg few weeks back. Am I putting two and two together We appear to be following their lead in getting rid of the armed forces. Quote Link to comment Share on other sites More sharing options...
Ash4781 Posted June 12, 2014 Share Posted June 12, 2014 Well I guess this is foward guidance? The MPC may be near a split. The CPI I expect to surprise on the downside. FT posted the labour market data which I read as weak. Then the mortgage approvals for purchase are turning down. Carney talks about looking at the data but which data is causing the problem? The housing market? That would be a massive change in MPC policy if they are genuinely targetting hpi. Quote Link to comment Share on other sites More sharing options...
thecrashingisles Posted June 12, 2014 Share Posted June 12, 2014 Australia had plastic bank notes in the mid-90s, well before NZ. Well we've had plastic politicians since the mid-90s. Quote Link to comment Share on other sites More sharing options...
zugzwang Posted June 12, 2014 Share Posted June 12, 2014 Volatility is too low. Have some volatility - WOOF!! p.s. it's not the first rate rise that matters it's the path thereafter. He wants to kick some volatility into the system, but not too much. Full text of Carney speech here (apols if someone's already linked it up) http://www.bankofengland.co.uk/publications/Pages/speeches/2014/736.aspx My take - he wants a slow and steady rise in the housing market, which enables him to keep rates lower, rather than risk having to use monetary policy to keep a lid on it. Whether that will prove possible with the dearth of supply is moot. Either way, I can't see prices falling much (maybe a zag) absent a recession. We know what they want. Household debt-to-GDP up again from ~140% in 2012 to ~170% in 2018 ie back where it was in 2008. What we don't know is why? Quote Link to comment Share on other sites More sharing options...
Bland Unsight Posted June 12, 2014 Share Posted June 12, 2014 ... Full text of Carney speech here (apols if someone's already linked it up) http://www.bankofengland.co.uk/publications/Pages/speeches/2014/736.aspx My take - he wants a slow and steady rise in the housing market, which enables him to keep rates lower, rather than risk having to use monetary policy to keep a lid on it. Whether that will prove possible with the dearth of supply is moot. Either way, I can't see prices falling much (maybe a zag) absent a recession. Thanks for the heads up and the links RK. . In addition, in the medium term, higher capital, liquidity and other prudential requirements can be expected to lead to higher spreads between borrowing rates and risk-free rates than before the crisis. Moreover, a highly indebted private sector is particularly sensitive to interest rates. Caution over the path of rate increases once they begin is also needed because we start at a point from which interest rates cannot easily be reduced. The effects of an excessive or an excessively rapid tightening of monetary policy could prove damaging and difficult to undo. Perhaps for these reasons, financial markets expect Bank Rate to rise to only 2¼% over the next three years and, on that basis, the MPC expects the economy to move towards internal balance – almost closing the output gap – in the same period. I read that as a pretty clear signal that the current 5-year fixed rate mortgage teaser offers will be resetting at something like 6%. Should be fun for those involved, (if borrowing at 5x joint income). Good to see plenty of discussion of the risks of excessive private sector indebtedness and the links between that problem and house prices and bank solvency. Still very optimistic that Carney is more of a bubble pricker than a bubble pumper. Who'd a thunk it? Quote Link to comment Share on other sites More sharing options...
Bland Unsight Posted June 12, 2014 Share Posted June 12, 2014 We know what they want. Household debt-to-GDP up again from ~140% in 2012 to ~170% in 2018 ie back where it was in 2008. What we don't know is why? That's not what they want. They want people to plough their pensions and bubble equity back into the collapsing Ponzi so that the losses are shared as broadly as possible across the shoulders with the ability to bear the losses. Quote Link to comment Share on other sites More sharing options...
wonderpup Posted June 12, 2014 Share Posted June 12, 2014 We know what they want. Household debt-to-GDP up again from ~140% in 2012 to ~170% in 2018 ie back where it was in 2008. What we don't know is why? To a man equipped with only a hammer all problems must be resolved by turning them into a nail? The SOP in economics seems to be to begin with theory and then apply a systemic intellectual filter that ensures that reality appears to conform to that theory. So perhaps the horrible truth is that they don't really have a clue what to do except repeat what they have always done which is to keep adding more credit to the system in the belief that at some point that credit will metamorphose into 'growth'. It's also worth contemplating that until now the utter failure of economics to address reality did not matter very much- they could happily play in their intellectual disney land without seeming to cause much harm- at least to people who mattered. But now there is a need for answers that actually work in the real world- but are economists really the people we should be looking to for those answers? Quote Link to comment Share on other sites More sharing options...
Venger Posted June 13, 2014 Share Posted June 13, 2014 Carney's economic toolkit is largely comprised of waffle and hope, he won't put up rates anytime soon, he just wants to give the impression the economy is improving. Demand is no where near the level at which it requires dampening. Prices are too high for demand. Real demand is low because house prices are too high. There is also lot of housing misallocation which tighter credit and higher mortgage rates would help sort out, bringing sellers to market willing to accept lower prices (bringing down values of other houses - even those not on the market). Quote Link to comment Share on other sites More sharing options...
ZeroSumGame Posted June 13, 2014 Share Posted June 13, 2014 Footbollox coming home, comin' home it's co-o-o-min home. Well it sure looks like some bag of wind is about to deflate. Whether that's Carney, Osborrow or the housing market - who knows? But I suspect all three. Not a fan of the round ball - but as it was Brazil I did watch. Quote Link to comment Share on other sites More sharing options...
ZeroSumGame Posted June 13, 2014 Share Posted June 13, 2014 What a choice...watch a bunch of over paid muppets who just dive and cheat and squeal like big girls when they dont get their way.....or watch the football Best shot of the tournament so far !!! Quote Link to comment Share on other sites More sharing options...
200p Posted June 13, 2014 Share Posted June 13, 2014 Anyone want to bet an imaginary £1 that he will raise rates by the end of 2014? And if people want to bet £1 that he won't? No fence sitters! Quote Link to comment Share on other sites More sharing options...
200p Posted June 13, 2014 Share Posted June 13, 2014 (edited) In the speech The housing market was now “the greatest risk to the domestic economy”, Mr Carney told an audience of senior bankers. ...but Mr Carney has suggested that he is unhappy with banks lending some customers four or five times their annual salary...... http://www.telegraph.co.uk/finance/mark-carney/10896845/Mark-Carney-tells-Mansion-House-Interest-rates-could-go-up-sooner.html So it is a bubble now. De facto. --- Anyone bored enough to fish out all the statements when he was in charge of the Canadian Central Bank? Edited June 13, 2014 by 200p Quote Link to comment Share on other sites More sharing options...
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