Now for the good news - IRs to rise?

[Bruce Banner]

https://news.sky.com/story/bank-of-england-sees-no-interest-rate-rises-until-2021-11709309

But at a news conference to accompany the publication of its quarterly inflation report, governor Mark Carney said there may be "more and more frequent interest rate increases than the market expects" if its updated forecasts prove correct.

[scottbeard]

If it's true, this is indeed good news - the 2007/8 crash won't truly be over until we are in a position of interest rates at historical normal levels, and not in recession.

*IF* it turns out to be true....

[Si1]

Inappropriate political timing? This guy should get the sack.

[bear.getting.old]

But nowhere to go if the economy downturns as we are already at virtually zero rates.  Yes the guy should be sacked

[Bruce Banner]

22 minutes ago, bear.getting.old said:

But nowhere to go if the economy downturns as we are already at virtually zero rates.  Yes the guy should be sacked

Sack him? He's doing exactly what the government are paying him to do, support house prices and keep the plates in the air.

Appointed by Osborne when he was chancellor. The shadow chancellor at he time, Ed Balls, agreed he was the best man for the job. Hammond seems happy with him too.

HPI rules! 

[dpg50000]

13 hours ago, scottbeard said:

If it's true, this is indeed good news - the 2007/8 crash won't truly be over until we are in a position of interest rates at historical normal levels, and not in recession.

*IF* it turns out to be true....

It's true that he said the words. The content is hollow though.

 

[Locke]

14 hours ago, scottbeard said:

until we are in a position of interest rates at historical normal levels

I think they will go way above normal levels, at least for a while as the economy shifts.

[PeanutButter]

28 minutes ago, Locke said:

I think they will go way above normal levels, at least for a while as the economy shifts.

6%? 10%? 

[pmf170170]

30 minutes ago, Locke said:

I think they will go way above normal levels, at least for a while as the economy shifts.

Not a chance, not whilst the government is in so much debt. The country would join BTL in going bust or if money were printed inflation would hammer those on fixed pension incomes that have very limited inflation protection.

[crouch]

We had a poll on here a few months ago about the level of rates at the end of the year. I said 0.1%. I still stand by that.

[Spindler]

1 minute ago, crouch said:

We had a poll on here a few months ago about the level of rates at the end of the year. I said 0.1%. I still stand by that.

Carney will be gone from next year....you know what they say abut new Brooms....?

Powell went hawkish out of the gate..if you catch my drift ?

[Locke]

52 minutes ago, pmf170170 said:

Not a chance, not whilst the government is in so much debt. The country would join BTL in going bust or if money were printed inflation would hammer those on fixed pension incomes that have very limited inflation protection.

Oh for sure. I don't think they will have control of it. Sterling is done, it just doesn't know it yet.

57 minutes ago, PeanutButter said:

6%? 10%? 

That would be the normal rate. 20, 25% or more.

I'm talking real interest rates, not the fake ones from the central bank.

[PeanutButter]

3 minutes ago, Locke said:

Oh for sure. I don't think they will have control of it. Sterling is done, it just doesn't know it yet.

That would be the normal rate. 20, 25% or more.

I'm talking real interest rates, not the fake ones from the central bank.

And this would just be in the UK, nowhere else?

[maffo in oxford]

They won't raise over 1.5% in the next five years at least

[Sour Mash]

21 hours ago, Bruce Banner said:

https://news.sky.com/story/bank-of-england-sees-no-interest-rate-rises-until-2021-11709309

But at a news conference to accompany the publication of its quarterly inflation report, governor Mark Carney said there may be "more and more frequent interest rate increases than the market expects" if its updated forecasts prove correct.

Classic case of "What they DO, not what they SAY" that should always be in your mind when central bankers speak.

He's trying to reign in the market with hints of rate rises whilst having no intention of actually raising rates. 

[Bruce Banner]

1 minute ago, Sour Mash said:

Classic case of "What they DO, not what they SAY" that should always be in your mind when central bankers speak.

He's trying to reign in the market with hints of rate rises whilst having no intention of actually raising rates. 

Indeed, hence my question mark in the thread title.

I doubt that Carney will change the habits of a lifetime but it's nice to have a chance to remind everyone that ultra low interest rates are a bad thing .

[zugzwang]

5 hours ago, maffo in oxford said:

They won't raise over 1.5% in the next five years at least

That's more like it. We may need a debt jubilee before we see a renormalisation  of interest rates.

[bear.getting.old]

6 hours ago, Sour Mash said:

Classic case of "What they DO, not what they SAY" that should always be in your mind when central bankers speak.

He's trying to reign in the market with hints of rate rises whilst having no intention of actually raising rates. 

Spot on

[DiggerUK]

The OP does not make a distinction between lending rates, and savings rates. The BOE base rate change affects loans, and does not affect savings rates.

Raises make mortgages and other loans more expensive, but leave the pound in your pocket devaluing if in a savings account..._

 

[spyguy]

23 hours ago, dpg50000 said:

It's true that he said the words. The content is hollow though.

 

This.

By BSing, it means that the markets expect BoE not to raise rates,. negating any signalling of intentions.

Which mean th BoE will have to push them higher.

I still stand by the basic economic truth - BoE has to rise rates higher than the Fed to reflect currency risk and lower growth.

The BoE ECB and FED and everyone else were able to slash rates to ZIRP as all other central banks were doing it.

QE resulted in making central banks more complex - theyve a large stock of debt to manage as well as IRs.

ADn CBs are no logner in sync - FED is raising - slowly but surely. And, despite the Trump blster, it may have to raise them more - the US economy is on fire, bit of Trump tax cuts, a lot of of CHina no longer being cheap so work returning, a bit of Europe giving oup on competing of finance, a bit of the opioid epidemic, a bit of boomers retiring and a lot of cyclic recovery - capital plant needs replacing and US infrastructure needs a massive refresh.

All of these will keep the US growing at a hefty rate for a decade or so.

https://www.ft.com/content/7ba8b150-6d90-11e9-80c7-60ee53e6681d

Yes, there s an issue with low job participation - some signed off on disability, some starving. But theres no tax credits make-work in play inn the US - you work FT hours or a small topup.

This demand has nowhere to go really.

If the Fed want s to get Trump off its back, itll start selling the debt it holds into the market, raising yields. Or it might move R up a bit.

ECB is stuck. Its wasted its QE just blindingly buying junk. It limited on buying German bonds now. It does not want to buy anymore PIIGS debts - ECB head changing.

German exports and inability to decide on junk country debt have sucked all demand out of the rest of Europe. Euro banks are still in a total mess. Euro labour is still opretty crap bar the northern countries. Italy is still no where near safe.

BoE? Somewhere between the two. The banks are in a better shape .m mainyl as theyve been shrunk. MMR  is having its effect. Im not 100% where the country stands with IO BTL and IO resi. I guess we'll find out soon. The delaying and shuffling can no longer continue. BoE needs to raise rate to firm up the currency. The fall in pouinds saw limited export boom - theres few productive copnaies in the UK, most are tied into long contracts. The UKs problem still is too mnay people on bebenfit and the public sector.

 

That was long n rambling. In short:

FED will alternate between slow IR icnreases and selling QE debt into the market.

ECB/EURO is mainly fuxxed. Wasted the 10 years.

BoE - somewhere between the two. But has a big problem with house prices and IO BTL and IO OO debt (i nthe South). BoE needs to keep its base rates ~0.5% ahead of the FED.

 

 

 

 

 

[spyguy]

30 minutes ago, DiggerUK said:

The OP does not make a distinction between lending rates, and savings rates. The BOE base rate change affects loans, and does not affect savings rates.

Raises make mortgages and other loans more expensive, but leave the pound in your pocket devaluing if in a savings account..._

 

This is true.

The days of the zilzch  spread between all properdee borrowing, be it resi or IO BTL, are gone.

90% LTV - Bank says No.

60% LTV, resi, low LTE - knock yourself out - spread less than 1%.

IO lending - Computer says No

BTL lending - Computer says lets check how much capital you have in your OO and what your income is going ahead and the computer might say Yes at base + 3%.

 

[Bruce Banner]

33 minutes ago, DiggerUK said:

The OP does not make a distinction between lending rates, and savings rates. The BOE base rate change affects loans, and does not affect savings rates.

Raises make mortgages and other loans more expensive, but leave the pound in your pocket devaluing if in a savings account..._

 

The article I quoted referred to base rates (I think).

For years I was getting 4 or 5% on savings when base rates were about 1% but Cameron and Osborne changed all that with FLS and TFS. These days I average a touch over 2% .

[DiggerUK]

5 minutes ago, Bruce Banner said:

.....For years I was getting 4 or 5% on savings when base rates were about 1% but Cameron and Osborne changed all that with FLS and TFS. These days I average a touch over 2% .

When commercial and investment arms of banking were separated following the meltdown in 2007, the government raised guarantees on our savings. The price for that was the banks could not use those funds for risky ventures. That meant the banks rates no longer 'linked' to base rates.

They simply had no incentive to attract your cash.   Now that link is broken nobody should expect savings rates to get exciting..._

[Locke]

On 03/05/2019 at 10:52, PeanutButter said:

And this would just be in the UK, nowhere else?

No, globally.

Off the top of my head, the only currency which isn't catastrophically stuffed is the Ruble and they've already been through rates of 15% in 2015 and are at 8% now

 

[NuBrit]

Rates aren't going anywhere this year. Inflation is at 1.9% and falling, if anything, we are more likely to see rates cut, especially if we get a hard Brexit.