BOE UK Interest rate on hold at 0.5%

[Social Justice League]

Carnage and the BOE are playing with fire.

Shocks are coming in the short term, imo.

[Simhadri]

33 minutes ago, btd1981 said:

Or very stupid.  Unfortunately 50 % of the population are below median intelligence,  and thanks to government assistance,  many of them have s much spending power as they need to buy a house at mental prices.

Not necessarily in Southeast. Fast forward to 2025, time will tell what is mental price.

[Sancho Panza]

Shaun Richards

https://notayesmanseconomics.wordpress.com/2018/03/22/the-libor-problem-is-also-a-us-dollar-problem/

'From Bloomberg yesterday.

The three-month London interbank funding rate rose to 2.27 percent Wednesday, the highest since 2008. The concern is that the Libor blowout may have more room to run, a prospect that borrowers and policy makers in various markets are just beginning to grapple with.'

Edited March 22, 2018 by Sancho Panza

[Sancho Panza]

Richards more worried by dollar not rising than by Libor rises

https://notayesmanseconomics.wordpress.com/2018/03/22/the-libor-problem-is-also-a-us-dollar-problem/

'Libor-OIS

As a consequence of the factors above this is also taking place. From Bloomberg reporting on some analysis from Citibank.

Strategists at the U.S. lender predict that the gap between the London interbank offered rate for dollars and the overnight indexed swap rate will continue to widen, potentially leading to a sharper tightening of financial conditions than central bankers have been anticipating. The differential between three-month rates has already more than doubled since the end of January to 55 basis points, a level unseen since 2009.

Now 55 basis points sounds much more grand that 0.55% but there is a flicker here as we try to price risk.

Comment

As you can see there are stresses in the financial system right now. Some of this was always going to take place when interest-rates went back up. But for me the real issue comes when we look at another market. This is because whichever way you look at the analysis here you would think that the US Dollar would be rising. You can arrive at that route by observing the apparent demand for US Dollars or by the higher interest-rates being paid in it or both. Yet it has been singing along to Alicia Keys.

Oh baby
I, I, I, I’m fallin’
I, I, I, I’m fallin’
Fall

I keep on
Fallin’

You can represent this by the UK Pound £ being in the US $1.41s or the Japanese Yen being in the 105s take your pick. The latter is off though because if Japanese banks are so keen for US Dollars why is the Yen so strong? To my mind that is much more worrying than Libor on its own as we switch to Carly Simon.

Edited March 22, 2018 by Sancho Panza

[Guest]

3 hours ago, JohnLondon said:

What a surprise!

Did anyone ever think the BOE would raise today and show the UK that the USA are setting the agenda rather than giving the illusion that Carney was.

[GreenDevil]

2 hours ago, hurlerontheditch said:

I really think that low rates (<2%) are the norm for the foreseeable. seems crazy, a patients last few gasps of air..

Agreed.

2 hours ago, longgone said:

that`s ok as long as houses plummet too.

Haha fat chance.

[longgone]

4 hours ago, GreenDevil said:

Agreed.

Haha fat chance.

2% base rates and the end of printing would achieve rates of around 4-5% savings rates.  but only if TFS is ended. 

happy to see house prices back at 2008-2011 levels.