Mark Carney’S Colleagues May Be Losing Patience With Him

[The Masked Tulip]

Since then, he has publicly given contradictory signals, one moment suggesting that rates will be hiked soon, and then appearing to go back on his words. This dithering has led one MP to compare him to an “unreliable boyfriend”.

Similarly, when Carney had a chance to force banks to cut back on mortgage lending in June, he blew it. Instead, he outlined measures that were (with one exception) essentially softer versions of the restrictions that the Financial Conduct Authority (FCA) had already put in place in the spring.

However, Carney may not be able to put off a decision on a rate rise for much longer.

Other members of the MPC are apparently growing increasingly worried about the effects of low rates on the economy. Indeed, there are strong rumours that several MPC members will break ranks with him at today’s meeting.

http://moneyweek.com/mark-carneys-colleagues-are-losing-patience/

[The Knimbies who say No]

They might do as DeAnne Julius has said she would were she still on the MPC done on the MPC in the past, and vote for a rise only on the expressed condition that it wouldn't result in a rate rise.

Edit, correction- Julius' comments were after she left the MPC.

Edited August 6, 2014 by Joan of The Tower

[Errol]

'vote for a rise only on the expressed condition that it wouldn't result in a rate rise'

lol.

[Sour Mash]

Seeing as how the entire 'economic recovery' is built on cheap, freely available liquidity from the central bank plus running a whopping structural deficit, I can't see TPTB raising rates of their own volition, certainly not before the election.

[The Knimbies who say No]

'vote for a rise only on the expressed condition that it wouldn't result in a rate rise'

lol.

You'd think it was made up, wouldn't you?

DeAnne Julius and Tim Besley said they would support a rate rise were they still on the nine-member Monetary Policy Committee (MPC), so long as the majority verdict was to leave rates unchanged at 0.5pc. The MPC will publish its decision at noon on Thursday.

http://www.telegraph.co.uk/finance/personalfinance/interest-rates/8314084/Bank-of-England-urged-to-vote-for-higher-interest-rates-by-ex-MPC-members.html

[billybong]

In King's days didn't they usually have one or two members prearranged who regularly took a view opposite to the majority vote to suggest that they weren't all just voting jobsworths and puppets.

The ploy convinced nobody - and it's a fair bet that this latest news is something along the same lines.

Edited August 6, 2014 by billybong

[StainlessSteelCat]

Agreed, this is just another signal for City fools to analyse the meaning of and speculate accordingly. Half of the population, and the economy, would likely have a heart attack if they actually increased the rate.

[Reck B]

You'd think it was made up, wouldn't you?

http://www.telegraph.co.uk/finance/personalfinance/interest-rates/8314084/Bank-of-England-urged-to-vote-for-higher-interest-rates-by-ex-MPC-members.html

I don't understand this at all. Can someone explain why they would say this?

Is it so they can say (when it all comes crashing down)

"I voted for a rate rise, but was out-voted" ??

[billybong]

Mr Besley, who was on the MPC until August 2009, also indicated he would join current MPC members Andrew Sentance and Martin Weale in voting for a rise so long as his was not the swing vote.

Typical.

[billybong]

Pressed on when she expected rates to rise, she predicted May.

To be more precise just after the general election?

Edited August 6, 2014 by billybong

[Reck B]

"I know some members of the committee have doubts about whether the Bank's forecasting model is the best way of forecasting the economy."

Pressed on when she expected rates to rise, she predicted May.

To be more precise just after the general election?

The article is from 2011, so her prediction was wrong.

Unless she meant May 2015.

[LC1]

Typical.

Weasely toad must be on the job description.

[billybong]

The article is from 2011, so her prediction was wrong.

Unless she meant May 2015.

She thought there would be a snap general election in 2012

[19 year mortgage 8itch]

I don't understand this at all. Can someone explain why they would say this?

Is it so they can say (when it all comes crashing down)

"I voted for a rate rise, but was out-voted" ??

No different from Mark Carney's forward bluffing, sorry 'guidance'.

They want people to think the BoE might raise rates if the world at large doesn't behave but the BoE wouldn't actually follow it through. They're hoping the threat of raise via outvoted committee hawks will do the job that actual raises would have done in the past.

Virtual central banking.

[interestrateripoff]

What would his payoff be? That's the most important question.

[zugzwang]

There's nothing unpredictable about Carnage. His job is to engineer an almighty housing bubble and keep it inflated until 2017 before he f**ks off back to Canada £5m richer than when he arrived. If all goes to plan Osborne will be Foreign Secretary by then, and Cameron set to retire from politics altogether, to join Bliar on the international greasing circuit.

[Sour Mash]

No different from Mark Carney's forward bluffing, sorry 'guidance'.

They want people to think the BoE might raise rates if the world at large doesn't behave but the BoE wouldn't actually follow it through. They're hoping the threat of raise via outvoted committee hawks will do the job that actual raises would have done in the past.

Virtual central banking.

It's the standard central banker MO:

You are pursuing a policy that has some undesirable effects. To stop or reduce these negative effects you imply that you are going to change your policy, in the hope that the markets react in anticipation of the threat being realised, thus achieving the result of the change without actually having to make it.

You of course have no intention of changing your policy direction and in fact if anything is going to change, it will be for you to pursue the policy even more vigorously.

It also helps if you have the mass media on board - hence the wall to wall warnings of imminent interest rate rises for months now.

What they DO, not what they SAY.

[LeeT]

Yup, it's all about managing the expectations channel, not about changing policy in the run up to a vital election.

[Reck B]

No different from Mark Carney's forward bluffing, sorry 'guidance'.

They want people to think the BoE might raise rates if the world at large doesn't behave but the BoE wouldn't actually follow it through. They're hoping the threat of raise via outvoted committee hawks will do the job that actual raises would have done in the past.

Virtual central banking.

Well, I kind of get that, but admitting you'd vote for a rate rise, providing you were part of the minority vote is quite brazen.

She may as well of said "even though I've been given one of the UK's upmost responsibilities and powers, I don't want my vote to count because I want you all to like me. I'm nothing but a gutless, spineless pussy"

[Democorruptcy]

Follow the money....

Every time Carney announces something that turns markets one way and then another, which traders made the most money? As we all own a huge part of RBS, we should be hoping they were tipped off and not Goldman Sachs?

[Bland Unsight]

Not seeking to be inflammatory for its own sake, though I realise this may draw some criticism - but doesn't it get to the point where the thoroughgoing cynicism regarding the aims and intentions of the Bank of England becomes itself, a kind of ramping? Take the decision of the FCA re selling CoCos to retail investors. If all the Bank of England wanted to do was screw everyone and always put the interests of the zombie banks first, why do that? Likewise, why ban IO? Why put in any cap on mortgage multiples, no matter how crummy? Why require any of the MMR changes, no matter how lame or easily gamed?

At the very least we have a massive demonstration in the rear view mirror that allowing the private banks to do what they want and having financial stability are conflicting goals. The regulator must be balancing these goals to some extent and not just allowing the private banks to feast on their less sophisticated customers to an unlimited extent. Christ, how low have I fallen - defending the Bank of England, again.

[bankstersparadise]

Not seeking to be inflammatory for its own sake, though I realise this may draw some criticism - but doesn't it get to the point where the thoroughgoing cynicism regarding the aims and intentions of the Bank of England becomes itself, a kind of ramping? Take the decision of the FCA re selling CoCos to retail investors. If all the Bank of England wanted to do was screw everyone and always put the interests of the zombie banks first, why do that? Likewise, why ban IO? Why put in any cap on mortgage multiples, no matter how crummy? Why require any of the MMR changes, no matter how lame or easily gamed?

At the very least we have a massive demonstration in the rear view mirror that allowing the private banks to do what they want and having financial stability are conflicting goals. The regulator must be balancing these goals to some extent and not just allowing the private banks to feast on their less sophisticated customers to an unlimited extent. Christ, how low have I fallen - defending the Bank of England, again.

Carney and his cronies aren't stupid.

They know they can't relentlessly ramp the economy/housing market etc as then they risk an overheat, market interest rates blowing out, GBP getting punished etc. In reality this 20% rip in London property in the last year is ahead of even msot bullish expectations. And the BofE etc know that speed and magnitude of this move has second order implications which could be very detrimental to the whole ponzi scheme in which we try to eke out an existence. So they are trying to temper things somewhat.

There is no doubt in my mind that the desired trajectory is upwards over the long run BUT sustainability of this is very important to them. And after 2007 central banks are a little bit more concerned about sustainability.

Of course we all know that Goldilocks (not too hot, not too cold) is hard to please and it is very difficult to keep the UK economy in equilibrium since once you add huge levels of leverage and fractional reserve banking system an equilibrium is basically impossible to ever hit.

So yes I agree the Bank of England is not just out to ramp house prices to the moon overnight and allow financial intuitions to profit along the way. But I think recent actions are temporary. If we see confidence really drop out of the housing market and the BofE holds the course on these policies then we really know what it is they are actually up to.

My base case would be that as the bottom continues to fall out of the housing market their stance will change once again.

[200p]

Pound going up against dollar, inflation controlled, wages not rising fast, house prices going up, why would he raise interest rates?

Pensioners low income offset by their house increasing in value.

[Venger]

Less talk, more action. Couple of scans (although one turned out a bit too small to read) from today's Times.

Andrew Sentance
History is full of the dire results of putting off a decision on rate rises until too late

[Pic] The official Bank rate is at an abnormally low level - lower even than in the Great Depression of the 1930s when evictions like this one in Chelsea were commonplace.

..So why are we waiting for the first rise in UK interest rates when we are into the sixth year of economy recovery and the emergency conditions that prompted a reduction in the official Bank rate to 0.5 per cent have long passed.

(too large to really embed here) http://i57.tinypic.com/nwbnh4.jpg

http://www.london24.com/polopoly_fs/1.3560345!/image/1200938624.jpg_gen/derivatives/landscape_630/1200938624.jpg
17th September 1930: Protesters demonstrating in Chelsea against the eviction of several poor families (Photo by S. R. Gaiger/Topical Press Agency/Getty Images)

and

[19 year mortgage 8itch]

Well, I kind of get that, but admitting you'd vote for a rate rise, providing you were part of the minority vote is quite brazen.

She may as well of said "even though I've been given one of the UK's upmost responsibilities and powers, I don't want my vote to count because I want you all to like me. I'm nothing but a gutless, spineless pussy"

It's about wanting shades of grey when the only choice you have is monochrome.

I always vote note no in any pay offer so I never have to make that central banker's admission.