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maverick73

BoE MPC Summary - Q1 2017 (Jan to March)

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The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 1 February 2017, the Committee voted unanimously to maintain Bank Rate at 0.25%. The Committee voted unanimously to continue with the programme of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, totalling up to £10 billion. The Committee also voted unanimously to maintain the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £435 billion.

As the MPC had observed at the time of the UK’s referendum on membership of the EU, the appropriate path for monetary policy depends on the evolution of demand, potential supply, the exchange rate, and therefore inflation. The Committee’s latest economic projections are contained in the February Inflation Report. The MPC has increased its central expectation for growth in 2017 to 2.0% and expects growth of 1.6% in 2018 and 1.7% in 2019. The upgraded outlook over the forecast period reflects the fiscal stimulus announced in the Chancellor’s Autumn Statement, firmer momentum in global activity, higher global equity prices and more supportive credit conditions, particularly for households. Domestic demand has been stronger than expected over the past few months, and there have been relatively few signs of the slowdown in consumer spending that the Committee had anticipated following the referendum. Nevertheless, continued moderation in pay growth and higher import prices following sterling’s depreciation are likely to mean materially weaker household real income growth over the coming few years. As a consequence, real consumer spending is likely to slow.

In preparing the February Report, the MPC undertook its scheduled regular assessment of aggregate supply- side conditions. Pay growth, although edging up, has remained persistently subdued by historical standards – strikingly so in light of the decline in the rate of unemployment to below 5%. This is likely to have reflected somewhat stronger labour supply than previously assumed and, therefore, the presence of a greater margin of slack in the labour market, restraining wage increases. This updated assessment means that the stronger path for demand in the February projection is roughly matched by higher supply capacity. Combined with the 3% appreciation of sterling and a somewhat higher yield curve over the past three months, that results in a projected path of inflation that is similar to the one expected in November, despite the stronger growth outlook.

The value of sterling remains 18% below its peak in November 2015, reflecting investors’ perceptions that a lower real exchange rate will be required following the UK’s withdrawal from the EU. Over the next few years, a consequence of weaker sterling is that the higher imported costs resulting from it will boost consumer prices and cause inflation to overshoot the 2% target. This effect is already becoming evident in the data. CPI inflation rose to 1.6% in December and further substantial increases are very likely over the coming months. In the central projection, conditioned on market yields that are somewhat higher than in November, inflation is expected to increase to 2.8% in the first half of 2018, before falling back gradually to 2.4% in three years’ time. Inflation is judged likely to return to close to the target over the subsequent year. Measures of inflation compensation derived from financial markets have stabilised at around average historical levels, having increased during late 2016 as concerns about a period of unusually low inflation faded.

Monetary policy cannot prevent either the real adjustment that is necessary as the UK moves towards its new international trading arrangements or the weaker real income growth that is likely to accompany it over the next few years. Attempting to offset fully the effect of weaker sterling on inflation would be achievable only at the cost of higher unemployment and, in all likelihood, even weaker income growth. For this reason, the MPC’s remit specifies that in such exceptional circumstances the Committee must balance the trade-off between the speed with which it intends to return inflation to the target and the support that monetary policy provides to jobs and activity. At its February meeting, the MPC continued to judge that it remained appropriate to seek to return inflation to the target over a somewhat longer period than usual, and that the current stance of monetary policy remained appropriate to balance the demands of the Committee’s remit.

As the Committee has previously noted, however, there are limits to the extent that above-target inflation can be tolerated. The continuing suitability of the current policy stance depends on the trade-off between above-target inflation and slack in the economy. The projections described in the Inflation Report depend in good part on three main judgements: that the lower level of sterling continues to boost consumer prices broadly as expected, and without adverse consequences for expectations of inflation further ahead; that regular pay growth does indeed remain modest, consistent with the Committee’s updated assessment of the remaining degree of slack in the labour market; and that the hitherto resilient rates of household spending growth slow as real income gains weaken. In judging the appropriate policy stance, the Committee will be monitoring closely the incoming evidence regarding these and other factors. For instance, if spending growth slows more abruptly than expected, there is scope for monetary policy to be loosened. If, on the other hand, pay growth picks up by more than anticipated, monetary policy may need to be tightened to a greater degree than the gently rising path implied by market yields. Monetary policy can respond, in either direction, to changes to the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target. 

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House price inflation also picked up in Q4, having slowed over much of 2016. Uncertainty around the impact of Brexit on housing  demand appeared to weigh on price growth initially, but this effect faded in the months following the referendum, alongside the recovery in consumer confidence (Chart 2.5). The average of the Halifax and Nationwide house price indices rose by 6.6% on an annualised basis in the three months to December, having risen by 2.4% in the three months to September.

Housing market activity is projected to continue to increase gradually in the near term. Mortgage approvals, a leading indicator of transactions, have risen, and the RICS survey balance for new buyer enquiries points to a further pickup in activity.

Investment in new and existing dwellings was little changed in 2016 Q3, broadly as expected in November, and is projected to remain broadly flat in coming quarters. Overall, housing investment is projected to grow modestly in the near term, largely reflecting a rise in transaction spending.  

mpsfeb.pdf

BoE Inflation Report pages 13-14.png

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BoE's three year inflation projection...........the economic equivalent of trying to pick a ducks feather from a fox's bum.

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11 minutes ago, GreenDevil said:

Who cares what the bunch of incompetent clowns think. 

To stay ahead of the clown pack, you must first understand how the clown thinks. The target is steady inflation as directed by the ex-chancellor Mr Brown. If they can achieve inflation as required... then why raise the interest rates.... 

 

MPC.png

Edited by maverick73

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At any rate they're just a bunch of thieving crooks.

Any amount of dodgy charts won't change that.

For sure that'll be confirmed yet again when the election manifesto promises (that people will yet again fall for hook line and sinker) are yet again reneged on.

Edited by billybong

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Just now, billybong said:

At any rate they're just a bunch of crooks

They have a job to do... they still operate under the 'New' but old Labour mandate... generate money so the government can spend. In the back ground how many houses do MP's own... 

The Conservative party has the highest number of landlord MPs at 128, meaning 39% of Tory MPs are landlords, compared with 26% of Scottish National party MPs and 22% from Labour...

Now who wants to vote?

MP Landlords.png

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Would any of these MP's want the interest rates to rise...... :ph34r:

The full list of London MPs who are residential landlords in 2015 were:

  • Rushanara Ali (Labour, Bethnal Green and Bow)
  • James Berry (Conservative, Kingston and Surbiton)
  • Bob Blackman (Conservative, Harrow East)
  • Ruth Cadbury (Labour, Brentford and Isleworth)
  • Jane Ellison (Conservative, Battersea)
  • Mike Freer (Conservative, Finchley and Golders Green)
  • Meg Hillier (Labour, Hackney South and Shoreditch)
  • Nick Hurd (Conservative, Ruislip-Northwood and Pinner)
  • Jo Johnson (Conservative, Orpington)
  • David Lammy (Labour, Tottenham)
  • Seema Malhotra (Labour, Feltham and Heston)
  • Tania Mathias (Conservative, Twickenham)
  • Bob Neill (Conservative, Bromley and Chislehurst)
  • Joan Ryan (Labour, Enfield North)
  • Gareth Thomas (Labour, Harrow West)
  • Emily Thornberry (Labour, Islington South and Finsbury)
  • Theresa Villiers (Conservative, Chipping Barnet)

Other MPs who let residential property in London (2015) :

  • John Baron (Conservative, Basildon and Billericay)
  • Richard Benyon (Conservative, Newbury)
  • John Bercow (Conservative, Buckingham)
  • Clive Betts (Labour, Sheffield South East)
  • Andy Burnham (Labour, Leigh)
  • David Cameron (Conservative, Witney)
  • Douglas Carswell (UKIP, Clacton)
  • Alex Chalk (Conservative, Cheltenham)
  • James Cleverly (Conservative, Braintree)
  • Geoffrey Clifton-Brown (Conservative, The Cotswolds)
  • Damian Collins (Conservative, Folkstone and Hythe)
  • David Crausby (Labour, Bolton North)
  • Geraint Davies (Labour, Swansea West)
  • Philip Davies (Conservative, Shipley)
  • Richard Drax (Conservative, South Dorset)
  • James Duddridge (Conservative, Rochford and Southend East)
  • Alan Duncan (Conservative, Rutland and Melton)
  • Philip Dunne (Conservative, Ludlow)
  • George Eustice (Conservative, Camborne and Redruth)
  • Liam Fox (Conservative, North Somerset)
  • John Glen (Conservative, Salisbury)
  • Robert Goodwill (Conservative, Scarborough and Whitby)
  • James Gray (Conservative, North Wiltshire)
  • Chris Grayling (Conservative, Epsom and Ewell)
  • Dominic Grieve (Conservative, Beaconsfield)
  • John Hayes (Conservative, South Holland and The Deepings)
  • James Heappey (Conservative, Wells)
  • Philip Hollobone (Conservative, Kettering)
  • Jeremy Hunt (Conservative, South West Surrey)
  • Stewart Jackson (Conservative, Peterborough)
  • Sajid Javid (Conservative, Bromsgrove)
  • Bernard Jenkin (Conservative, Harwich and North Essex)
  • Greg Knight (Conservative, East Yorkshire)
  • Norman Lamb (Liberal Democrat, North Norfolk)
  • Chris Leslie (Labour, Nottingham East)
  • Oliver Letwin (Conservative, West Dorset)
  • Julian Lewis (Conservative, New Forest East)
  • Angus MacNeil (Scottish National Party, Na h-Eileanan an Iar)
  • Alasdair McDonnell (SDLP, Belfast South)
  • Michael Meacher (Labour, Oldham West)
  • Madeleine Moon (Labour, Bridgend)
  • Anne-Marie Morris (Conservative, Newton Abbot)
  • John Nicolson (Scottish National Party, East Dumbartonshire)
  • George Osborne (Conservative, Tatton)
  • Owen Paterson (Conservative, North Shropshire)
  • Jeremy Quinn (Conservative, Horsham)
  • Jacob Rees-Mogg (Conservative, North East Somerset)
  • Laurence Robertson (Conservative, Tewkesbury)
  • Antoinette Sandbach (Conservative, Eddisbury)
  • Andrew Smith (Labour, Oxford East)
  • Julian Smith (Conservative, Skipton and Ripon)
  • Desmond Swayne (Conservative, New Forest West)
  • Anne-Marie Trevelyan (Conservative, Berwick upon Tweed)
  • Andrew Turner (Conservative, Isle of Wight)
  • Shailesh Vara (Conservative, North West Cambridgeshire)
  • Keith Vaz (Labour, Leicester East)
  • Ben Wallace (Conservative, Wyre and Preston North)
  • John Whittingdale (Conservative, Maldon)
  • Nadhim Zahawi (Conservative, Stratford on Avon)
Edited by maverick73

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22 minutes ago, maverick73 said:

To stay ahead of the clown pack, you must first understand how the clown thinks. The target is steady inflation as directed by the ex-chancellor Mr Brown. If they can achieve inflation as required... then why raise the interest rates.... 

 

MPC.png

"The MPC is made up of nine experts."

Is it ******!

Lying toerags!

Edited by GreenDevil

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Full list of landlord Tory MPs who voted against making properties 'fit for human habitation'

Full list of landlord MPs who voted against amendment:

  • Nigel Adams
  • Stuart Andrew
  • Victoria Atkins
  • Jake Berry
  • James Berry
  • Bob Blackman
  • Robert Buckland
  • Alun Cairns
  • David Cameron
  • Alex Chalk
  • James Cleverley
  • Geoffrey Clifton-Brown
  • Geoffrey Cox
  • Mims Davies
  • Philip Davies
  • Richard Drax
  • James Duddridg
  • Alan Duncan
    Philip Dunne
    Jane Ellison
    George Eustice
    Mike Freer
    Richard Fuller
    John Glen
    Robert Goodwill
    Chris Grayling
    Dominic Grieve
    Chris Heaton-Harris
    Peter Heaton-Jones
    George Hollingberry
    Kevin Hollinrake
    Philip Hollobone
    Nick Hurd
    Stewart Jackson
    Margot James
    Sajid Javid
    Joseph Johnson
    Simon Kirby (teller)
    Greg Knight
    Brandon Lewis
    Julian Lewis
    Craig Mackinlay
    Tania Mathias
    Karl McCartney
    Anne Marie
    Morris Sheryll
    Murray Robert
    Neill Sarah
    Newton (teller)
    Jesse Norman
    David Nuttall
    Neil Parish
    Owen Paterson
    Rebecca Pow
    Jeremy Quin
    Jacob Rees-Mogg
    Laurence Robertson
    Julian Smith
    Royston Smith
    Mark Spencer
    John Stevenson
    Desmond Swayne
    Derek Thomas
    Anne-Marie Trevelyan
    Andrew Turner
    Shailesh Vara
    Theresa Villiers
    Ben Wallace
    David Warburton
    Craig Whittaker
    John Whittingdale
    Nadhim Zahawi

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14 minutes ago, billybong said:

At any rate they're just a bunch of thieving crooks.

Any amount of dodgy charts won't change that.

For sure that'll be confirmed yet again when the election manifesto promises (that people will yet again fall for hook line and sinker) are yet again reneged on.

Not quite. Because the private sector is still debt saturated and incapable of holding up the economy by itself, out of necessity the Conservatives will be obliged to tear up their own manifesto and adopt most of Labour's instead.

Corbyn isn't hard left, the centre has shifted.

Anyone voting Conservative in the expectation of seeing lower taxes, smaller govt, a hard Brexit, reduced immigration and a balanced budget is completely delusional.

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9 minutes ago, zugzwang said:

Not quite. Because the private sector is still debt saturated and incapable of holding up the economy by itself, out of necessity self servery the Conservatives will be obliged to tear up their own manifesto and adopt most of Labour's the elite's instead.

Corbyn isn't hard left, the centre has shifted.

Anyone voting Conservative in the expectation of seeing lower taxes, smaller govt, a hard Brexit, reduced immigration and a balanced budget is completely delusional.

It'll be interesting to see what's in all of their manifestos ready to be reneged on once they get another sniff of power.

Edited by billybong

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1 hour ago, billybong said:

It'll be interesting to see what's in all of their manifestos ready to be reneged on once they get another sniff of power.

Anything to patter to the masses...   

the biggest purchase a consumer will make is to buy a home. Yet we don't hear how they will continue that trend... owning a home is privilege for the affluent...

Tony Blair (The undercover conservative) has a property empire worth £27+ million....

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3 hours ago, zugzwang said:

Anyone voting Conservative in the expectation of seeing lower taxes, smaller govt, a hard Brexit, reduced immigration and a balanced budget is completely delusional.

Indeed. Or even, "Anyone voting Conservative in the expectation of seeing lower taxes, smaller govt, a hard Brexit, reduced immigration and a balanced budget is completely delusional."

More deliberate misrepresentation of the remit, little wonder they couldn't find a quote to support the claim that "the MPC’s remit specifies that in such exceptional circumstances the Committee must balance the trade-off between the speed with which it intends to return inflation to the target and the support that monetary policy provides to jobs and activity."

Because it doesn't specify that whatsoever.

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"For instance, if spending growth slows more abruptly than expected, there is scope for monetary policy to be loosened. If, on the other hand, pay growth picks up by more than anticipated, monetary policy may need to be tightened to a greater degree than the gently rising path implied by market yields. "

 

Asymmetric interest rate policy right there.

 

We do so love to lower rates and will only raise them if forced to.

Edited by Si1

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25 minutes ago, Si1 said:

"For instance, if spending growth slows more abruptly than expected, there is scope for monetary policy to be loosened. If, on the other hand, pay growth picks up by more than anticipated, monetary policy may need to be tightened to a greater degree than the gently rising path implied by market yields. "

 

Asymmetric interest rate policy right there.

 

We do so love to lower rates and will only raise them if forced to.

The rate would need to be static for 40 years approx. to allow for wage growth to match asset values. A correction may occur in year 2025... I wonder how many landlords work within the governments treasury select commitee.... why change it, if it personally makes them richer :ph34r:

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1 hour ago, Si1 said:

"For instance, if spending growth slows more abruptly than expected, there is scope for monetary policy to be loosened. If, on the other hand, pay growth picks up by more than anticipated, monetary policy may need to be tightened to a greater degree than the gently rising path implied by market yields. "

 

Asymmetric interest rate policy right there.

 

We do so love to lower rates and will only raise them if forced to when its too late.

Only thing I take away from the posts is sterling 18% lower.

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2 hours ago, Si1 said:

"For instance, if spending growth slows more abruptly than expected, there is scope for monetary policy to be loosened. If, on the other hand, pay growth picks up by more than anticipated, monetary policy may need to be tightened to a greater degree than the gently rising path implied by market yields. "

 

Asymmetric interest rate policy right there.

 

We do so love to lower rates and will only raise them if forced to.

The BOE has been pretty open in treating wage inflation as the danger, CPI inflation as an annoyance and asset inflation as an irrelevance.  It's not a secret conspiracy, they've said this many times.

A branch of government explicitly states its intention to make the population poorer, to prevent wage growth, and this is largely ignored by the press. 

No political row, no commentry, nothing. 

Goes to show that dressing up ideology as economics, and pretending economics is a science, is a great way of silencing opposition.

Edited by DrBuyToLeech

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10 minutes ago, DrBuyToLeech said:

The BOE has been pretty open in treating wage inflation as the danger, CPI inflation as an annoyance and asset inflation as an irrelevance.  It's not a secret conspiracy, they've said this many times.

A branch of government explicitly states its intention to make the population poorer, to prevent wage growth, and this is largely ignored by the press. 

No political row, no commentry, nothing. 

Goes to show that dressing up ideology as economics, and pretending economics is a science, is a great way of silencing opposition.I think this is one of the most infuriating aspects

It's a function of the Bank's New Keynesian general equilibrium model COMPASS (Central Organising Model for Projection Analysis and Simulation Scenarios!) where prices and wages are assumed to be sticky and agents' expectations of future demand critical to medium-term economic outcomes.

Total hokum, of course. Real markets operate far from equilibrium. Supply and demand are never perfectly matched. There are no conservative variables, debt is being continually created and destroyed, and agents' future expectations have a finite horizon, radically truncated by market noise.

Had the they used a dynamic, disequilibrium economic model like Steve Keen's 'Minsky' they would have been conscious of the fact that the UK private sector is still acutely debt constrained and most unlikely to sustain wage rises > 2% anyway.

Why the Labour party continues to collude in this pantomime is perhaps the greatest mystery of all. A desire to stick to one political narrative, that of anti-austerity, rather than wrangle the arguments in their full complexity? I'm still hopeful that Corbyn and McDonell will target the Canadian dummy and his scientifically illiterate sidekicks in the next four weeks.

 

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33 minutes ago, zugzwang said:

It's a function of the Bank's New Keynesian general equilibrium model COMPASS (Central Organising Model for Projection Analysis and Simulation Scenarios!) where prices and wages are assumed to be sticky and agents' expectations of future demand critical to medium-term economic outcomes.

Total hokum, of course. Real markets operate far from equilibrium. Supply and demand are never perfectly matched. There are no conservative variables, debt is being continually created and destroyed, and agents' future expectations have a finite horizon, radically truncated by market noise.

Had the they used a dynamic, disequilibrium economic model like Steve Keen's 'Minsky' they would have been conscious of the fact that the UK private sector is still acutely debt constrained and most unlikely to sustain wage rises > 2% anyway.

Why the Labour party continues to collude in this pantomime is perhaps the greatest mystery of all. A desire to stick to one political narrative, that of anti-austerity, rather than wrangle the arguments in their full complexity? I'm still hopeful that Corbyn and McDonell will target the Canadian dummy and his scientifically illiterate sidekicks in the next four weeks.

 

Interest rates were originally pencilled to rise in 2015...

CPI Inflation was lagging, now above 2%

Unemployment is below 7%

Wage growth is at 2%; further wage increases creates higher inflation. 

I'm hedging on sterlings magical increase in value, is the Fx markets have factored in the BoE have started shifting towards a hike. 

 

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1 hour ago, zugzwang said:

It's a function of the Bank's New Keynesian general equilibrium model COMPASS (Central Organising Model for Projection Analysis and Simulation Scenarios!) where prices and wages are assumed to be sticky and agents' expectations of future demand critical to medium-term economic outcomes.

Total hokum, of course. Real markets operate far from equilibrium. Supply and demand are never perfectly matched. There are no conservative variables, debt is being continually created and destroyed, and agents' future expectations have a finite horizon, radically truncated by market noise.

Had the they used a dynamic, disequilibrium economic model like Steve Keen's 'Minsky' they would have been conscious of the fact that the UK private sector is still acutely debt constrained and most unlikely to sustain wage rises > 2% anyway.

Why the Labour party continues to collude in this pantomime is perhaps the greatest mystery of all. A desire to stick to one political narrative, that of anti-austerity, rather than wrangle the arguments in their full complexity? I'm still hopeful that Corbyn and McDonell will target the Canadian dummy and his scientifically illiterate sidekicks in the next four weeks.

 

I love your scientific critique of economics, but economics isn't a science. It's just the theology of a ruling class. 

If the model didn't tell them to suppress wages, they would find a new model.

The question is: why aren't we outraged?  Forget 1p on income tax, or whatever, the Bank of England is dedicated to keeping your wages down!  

No one questions theology for fear of looking like a heretic or, in this case, a communist or a fool or both.  

That's exactly what we see being thrown at Corbyn (who I don't particularly support, but is clearly the victim of a media campaign to keep him out).

Even if it was a science, and it could be, I think there's a more far reaching problem before we worry about equilibrium or rationality.  

Economists study markets and free trade.  However a cursory glance at any real market shows that politics and power drive the world economy as much as, maybe more than, markets.

This is true from top to bottom.  Is your wage determined by the market, or is it determined by your relationship with the boss?

 

 

Edited by DrBuyToLeech

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