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I Told You So

Short Sterling Down Again

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Those city bods seem to have finally grasped the nettle that if rates are rising everywhere else in the world then it is highly unlikely that we will be able to cut ours.

:D

Well spotted. I've been watching this over the last weeks - quite a sharp transition.

My conclusion is that there was chance of a rate cut before Christmas, but that has all faded. It now very much looks like there will be a rise in interest rates in this half of the year.

A link to SS quotes:

http://www.futuresource.com/quotes/quotes.jsp?s=LSS

Predicted interest rate is (100-value quoted).

Edited by karhu

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Well spotted. I've been watching this over the last weeks - quite a sharp transition.

My conclusion is that there was chance of a rate cut before Christmas, but that has all faded. It now very much looks like there will be a rise in interest rates in this half of the year.

A link to SS quotes:

http://www.futuresource.com/quotes/quotes.jsp?s=LSS

Predicted interest rate is (100-value quoted).

I may be being fik, but it seems that the variation is very narrow - always within a 0.5% range either side for the next 5 years? Am I reading it right? Surely it would tend upwards over time (ie towards the long term average)?

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I may be being fik, but it seems that the variation is very narrow - always within a 0.5% range either side for the next 5 years? Am I reading it right? Surely it would tend upwards over time (ie towards the long term average)?

Depends if you are expecting a recession or not

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Sorry to sound so unknowledgable, but why is it unlikely that interest rates will be cut? I was disappointed and surprised the last time they were cut - it seemed to spur on a new optimism for a 'soft landing' in the housing market that seems to have materialised.

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Annie,

Never be worried about asking a question.

Basically with other countries rasing rates (as they are at the moment) it would be increasingly more advantageous to hold their currencies, trades/speculators and investors would swap out of the £ into those currencies and the value of the £ would fall leading to rising inflation. Particularly now as we are becoming increasingly dependent on imports - including raw materials and energy.

If your government is borrowing money then an attractive enough rate needs to be set, so problems can be caused there too if there are better deals elsewhere. That is one reason why governments like low inflation, cheap money

It was a sudden drop due to an anomaly with mispricing of the £ within the ERM that forced our exit from that system which led to the spike interest rates and imported inflation in the 90's.

Edited by OnlyMe

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Thanks for the explanation OnlyMe. So devaluation of the pound leads to inflation - that makes sense. It seems to me though that the MPC make decisions based on what retailers/consumers need rather than what is right for the country.

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As a corollary, it is thought that China's decision to diversify out of dollar

reserves is based on a readingof the recent Fed meeting minutes where it

was strongly hinted that their ratetightening cycle was coming to an end.

It seems the Chinese do not want to buy dollars if the interest rates are going

to be low. This in turn has caused the dollar to fall, and other Asian currencies

to rise.

South Korea and Taiwan in particular are rumoured to e considering Central

Bank intervention to prevent their own currencies becoming too strong (and

hurting exports to the US) by buying dollars today.

Could get very interesting (pardon the pun)

ABB

Edited by AgeingBabyBoomer

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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