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rantnrave

Interest Hike Aug 2nd - Will They / Won't They?

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Any thoughts out there?

YES:

  • Has been long predicted
  • Carney wants to lose 'unreliable boyfriend' reputation
  • Last vote was 6-3 to hold at 0.5% - more of the MPC are considering a hike
  • Economic data looking better, ie Q1 slump was mostly weather related
  • US continuing to tighten
  • Sterling is weaker, suggesting an uptick in inflation

NO:

  • Brexit uncertainty back in the news
  • Latest economic figures are better but not stellar (were better in recent years and the MPC didn't hike)
  • We haven't followed the US hikes
  • It's Mark Carney, and he doesn't like raising interest rates

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36 minutes ago, rantnrave said:

Any thoughts out there?

YES:

  • Has been long predicted
  • Carney wants to lose 'unreliable boyfriend' reputation
  • Last vote was 6-3 to hold at 0.5% - more of the MPC are considering a hike
  • Economic data looking better, ie Q1 slump was mostly weather related
  • US continuing to tighten
  • Sterling is weaker, suggesting an uptick in inflation

NO:

  • Brexit uncertainty back in the news
  • Latest economic figures are better but not stellar (were better in recent years and the MPC didn't hike)
  • We haven't followed the US hikes
  • It's Mark Carney, and he doesn't like raising interest rates

I always thought the putting up of interest rates would begin when the UK started producing good organic self sustaining growth without the help of QE or gimmicks, in other words I am not expecting rates to go up in decades except from maybe the odd small token one up or down. A raise in August, I would be amazed.

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1 hour ago, rantnrave said:

Any thoughts out there?

YES:

  • Has been long predicted
  • Carney wants to lose 'unreliable boyfriend' reputation
  • Last vote was 6-3 to hold at 0.5% - more of the MPC are considering a hike
  • Economic data looking better, ie Q1 slump was mostly weather related
  • US continuing to tighten
  • Sterling is weaker, suggesting an uptick in inflation

NO:

  • Brexit uncertainty back in the news
  • Latest economic figures are better but not stellar (were better in recent years and the MPC didn't hike)
  • We haven't followed the US hikes
  • It's Mark Carney, and he doesn't like raising interest rates

Of course not, we are not getting any rises.

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There will never be any interest rate rises fro the BOE -ever.

They are going to lose control of the interest rates and although the "official" rate will still be on the floor, real interest rates will go into double digits, 20's, 30's or higher.

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4 hours ago, rantnrave said:

 

If I were a betting man, I'd rather have a flutter on Belgium to win the world cup.

Having said that an England win could be a good time to hide some bad news.

Edited by Diver Dan

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1 hour ago, Locke said:

There will never be any interest rate rises fro the BOE -ever.

They are going to lose control of the interest rates and although the "official" rate will still be on the floor, real interest rates will go into double digits, 20's, 30's or higher.

Please elaborate. Seems both you and @durhamborn think this is the way things will go.

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As much as I'd love to see it, I can't see it happening - I think they'd be drip-feeding hints into the media by now if they were planning it so that it wouldn't shock the market. If they were going to go for a controlled, steady normalisation of rates (like they are in the the US) then they would have started in May - the fact they didn't suggests to me they'll always find some excuse for putting it off until outside circumstances force their hand.

 

 

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12 minutes ago, fru-gal said:

Please elaborate. Seems both you and @durhamborn think this is the way things will go.

Historically, that's the way it goes.

Government control of the interest rates distorts the market. Every little impositions distorts just a little more. Right now, asset values are entirely predicated upon the lowest rates in the history of mankind. 

If the BOE adds even .25% interest, that increases the cost of money by 50%. Asset values will collapse, so they can't do that.

If they maintain the low interest rates, they have to do this by pumping out more and more cash. Right now, a combination of public perception and the fact that institutions control most of the cash means that real interest rates are low. Once cash begins to escape "into the wild", the public will begin to control a greater fraction of it. Asset values will rise (what people think of as inflation)

Inflation stimulates interest rates. If your cash will be worth half in a year's time what it is now, the bank will need to give you 100% annual interest to tempt you to save rather than spend now. It then matters not what the central bank does, the people control the currency. Further attempts to maintain low interest rates will simply drive them up.

 

This is why we have the drive to e-currencies. When the cash is trapped in digital purgatory, the central bank may simply "delete" your bank account, so theoretically can exert more control on interest rates.

I don't think this will work, however. Why would you accept digital cash which they can delete on a whim? It will simply lead to further inflation. Very bullish case for PM/crypto.

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3 minutes ago, Locke said:

Historically, that's the way it goes.

Government control of the interest rates distorts the market. Every little impositions distorts just a little more. Right now, asset values are entirely predicated upon the lowest rates in the history of mankind.

Government doesn't control IRs...BoE has been independent since 1997.

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What is 'an interest rate rise'? 

The concept is unfamiliar to me..... is it some kind of indicator or measure of increased curiosity over time? 

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I'm going 60/40 on a rise to 0.75% on August 2nd as long as no new bad bombshell economic news comes out before then. They won't want to fall too far behind the US and even the EU are talking about tightening.

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Given that historically UK IR's have always very closely followed US IR's can someone explain (in simple terms) why it appears to be different this time?

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4 minutes ago, Sperm Donor said:

I'm going 60/40 on a rise to 0.75% on August 2nd as long as no new bad bombshell economic news comes out before then. They won't want to fall too far behind the US and even the EU are talking about tightening.

I still think we will follow the ECB and Draghi said rates won’t move until this time next year. Any chance the FED won’t want to move too far ahead of the ECB rather than the other way round? 

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10 minutes ago, locky82 said:

I still think we will follow the ECB and Draghi said rates won’t move until this time next year. Any chance the FED won’t want to move too far ahead of the ECB rather than the other way round? 

Not with US consumer spending running at its current blistering lick and Trump throwing hundreds of billions around on top. The debt taps are jammed wide open, US rates should be twice what they currently are.

Edited by zugzwang

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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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