ECB poised to announce largest rate rise in history of eurozone

[petetong]

The European Central Bank is poised to deliver the largest interest rate rise since the creation of the euro as it fights to bring surging inflation under control.

Economists expect the central bank to raise all three of its key interest rates by 0.75 percentage points on Thursday, after data showed that prices rose by a record 9.1pc in the year to August.

This would represent the biggest rate hike since the single currency was created in 1999.

The ECB is also expected to revise up its inflation forecasts and cut growth projections again as Russia’s restriction of gas supplies to the Continent threatens to throw the bloc into a severe recession.

Peter Praet, chief economist of the ECB until 2019, said it was time for the central bank to act forcefully.

He said: “I would do 75 basis points. They need to give a strong signal that they mean business. It’s clear that with inflation at 9.1pc, you cannot keep interest rates at zero.”

 

https://www.telegraph.co.uk/business/2022/09/04/ecb-poised-announce-largest-rate-rise-history-eurozone/

Will this spur the BOE to do same, somehow i doubt it.

 

[Dreamcasting]

17 minutes ago, petetong said:

Will this spur the BOE to do same, somehow i doubt it.

If the western central banks are all working in concert (which they are), then yes.

They've all been ordered to hike rates, so that's what they'll do.

[TerryBoi]

23 minutes ago, petetong said:

The European Central Bank is poised to deliver the largest interest rate rise since the creation of the euro as it fights to bring surging inflation under control.

Economists expect the central bank to raise all three of its key interest rates by 0.75 percentage points on Thursday, after data showed that prices rose by a record 9.1pc in the year to August.

This would represent the biggest rate hike since the single currency was created in 1999.

The ECB is also expected to revise up its inflation forecasts and cut growth projections again as Russia’s restriction of gas supplies to the Continent threatens to throw the bloc into a severe recession.

Peter Praet, chief economist of the ECB until 2019, said it was time for the central bank to act forcefully.

He said: “I would do 75 basis points. They need to give a strong signal that they mean business. It’s clear that with inflation at 9.1pc, you cannot keep interest rates at zero.”

 

https://www.telegraph.co.uk/business/2022/09/04/ecb-poised-announce-largest-rate-rise-history-eurozone/

Will this spur the BOE to do same, somehow i doubt it.

 

Bailey has to do the same + 0.25% extra to get peoples attention due to the precarious position of the UK.

The fact that these the EU is still revising upwards indicate a big problem.

The UK is a little behind the EU.

For Bailey its gotta be 1% or bust.

[petetong]

5 minutes ago, TerryBoi said:

Bailey has to do the same + 0.25% extra to get peoples attention due to the precarious position of the UK.

The fact that these the EU is still revising upwards indicate a big problem.

The UK is a little behind the EU.

For Bailey its gotta be 1% or bust.

Can't see it, Bailey/MPC have more or less indicated by their previous actions they will raise them as little as possible. I hope I am very wrong but ...

[spyguy]

I reckon BoE will do 1%

[dances with sheeple]

35 minutes ago, TerryBoi said:

Bailey has to do the same + 0.25% extra to get peoples attention due to the precarious position of the UK.

The fact that these the EU is still revising upwards indicate a big problem.

The UK is a little behind the EU.

For Bailey its gotta be 1% or bust.

Behind the EU? Not sure about that, the words  "mean business" and "ECB" shouldn`t be in the same book let alone sentence

[onlooker]

26 minutes ago, spyguy said:

I reckon BoE will do 1%

Not a chance.

The UK base rate is 1.75%, Euro is 0.5%.

ECB might raise 0.75%, UK might raise 0.5%.

But I wouldn't bet on it.

[bomberbrown]

12 minutes ago, onlooker said:

Not a chance.

The UK base rate is 1.75%, Euro is 0.5%.

ECB might raise 0.75%, UK might raise 0.5%.

But I wouldn't bet on it.

I think BoE raising 0.5% the week after next is more or less guaranteed.  There’s currently more chance they do 0.75% than 0.25%.  

[bomberbrown]

Also to add, the BoE decision is six days before the Fed this month.  There will be some psychological push for the BoE to go for at least a 0.5% raise as that will mean that UK/USA will be on same interest rate of 2.25%.
 

Mind you, that will be short lived because I think the Fed will do another 0.75% six days later anyway.  
 

https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

Edited September 4, 2022 by bomberbrown
Forgot link

[Huggy]

Considering the GBP/USD chart and the improvement in gilt rates, I'll go for 0.75% for the BoE with a chance of 1%.

The point around raising 0.5% to get in line with the Fed for a week is an interesting psychological possibility. But would the currency hold out and would they need to do an emergency meeting a fortnight later? That would be a bit embarrassing for Andrew 'You raaaaaaaise me uuuuup so I can stand on mountains' Bailey wouldn't it

[Sour Mash]

We're probably beyond the point now where interest rates are going to be able to save the value of currencies.

The main factors will be, IMO:

 What do you produce that others are willing to buy from you?

 What stuff do YOU need to buy elsewhere in order to produce the above, or even just to keep your population warm and fed?

 Oh yeah, and you have HOW MUCH existing debt?

 

Doesn't look very good for most of the West.  The US probably has at least a decade left of being able to print the dollar though thanks to Reserve Currency status.

 

[Social Justice League]

Time to bankrupt filthy debtors.

About time.  Get them all to fook.

[Chunketh]

35 minutes ago, Social Justice League said:

Time to bankrupt filthy debtors.

About time.  Get them all to fook.

Some people just want to watch the world burn.

[spyguy]

3 hours ago, onlooker said:

Not a chance.

The UK base rate is 1.75%, Euro is 0.5%.

ECB might raise 0.75%, UK might raise 0.5%.

But I wouldn't bet on it.

 

3 hours ago, bomberbrown said:

I think BoE raising 0.5% the week after next is more or less guaranteed.  There’s currently more chance they do 0.75% than 0.25%.  

 

3 hours ago, bomberbrown said:

Also to add, the BoE decision is six days before the Fed this month.  There will be some psychological push for the BoE to go for at least a 0.5% raise as that will mean that UK/USA will be on same interest rate of 2.25%.
 

Mind you, that will be short lived because I think the Fed will do another 0.75% six days later anyway.  
 

https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

Theres no meeting in October.

Any decision made on the 15th has to last til November, effectively meaning they need to to do two months move in one month.

1%

 

 

 

[nero120]

26 minutes ago, Chunketh said:

Some people just want to watch the world burn.

When that world is full of and run by useless *****s imposing their uselessness on the useful, productive few, I think a good burning is in order don't you?

[Chunketh]

2 minutes ago, nero120 said:

When that world is full of and run by useless *****s imposing their uselessness on the useful, productive few, I think a good burning is in order don't you?

Maybe. 
The UK is 7 trillion in the hole though, so that makes us all feckless debtors.

[Flat Bear]

4 hours ago, TerryBoi said:

Bailey has to do the same + 0.25% extra to get peoples attention due to the precarious position of the UK.

The fact that these the EU is still revising upwards indicate a big problem.

The UK is a little behind the EU.

For Bailey its gotta be 1% or bust.

When Bailey and the BOE raise rates again by 0.5% will you at last realize you have been wrong about Bailey? He will go on about impending doom and gloom and recessionary factors pushing down inflation but hopefully you will not fall for it again? Surely?

6 minutes ago, spyguy said:

Theres no meeting in October.

Any decision made on the 15th has to last til November, effectively meaning they need to to do two months move in one month.

1%

It will be 0.5% and yes it will drag us into November. So another 2 months with very low interest rates.

More interestingly I have penciled in November for when Bailey gets tha sack.

[2buyornot2buy]

5 minutes ago, Flat Bear said:

When Bailey and the BOE raise rates again by 0.5% will you at last realize you have been wrong about Bailey? He will go on about impending doom and gloom and recessionary factors pushing down inflation but hopefully you will not fall for it again? Surely?

It will be 0.5% and yes it will drag us into November. So another 2 months with very low interest rates.

More interestingly I have penciled in November for when Bailey gets tha sack.

I have to agree. It will be 0.5% and Bailey won't be around for the next meeting. 

[Flat Bear]

I do not think we will see a 0.75% raise by the ECB. I think they are trying to prop up the EURO out of desperation.

I would guess a 0.5% raise, could be lower. This will increase the current deposit facility rate from zero to a small positive rate. Ridiculous when you think about it.

12 minutes ago, 2buyornot2buy said:

I have to agree. It will be 0.5% and Bailey won't be around for the next meeting. 

I was wondering if she would let him chair the next meeting. BUT you are probably right and with a new manager comes a new team and she will want to show her resolve ASAP. Although she was in the cabinet there is enough distance from her and previous decisions.

[spyguy]

29 minutes ago, Flat Bear said:

When Bailey and the BOE raise rates again by 0.5% will you at last realize you have been wrong about Bailey? He will go on about impending doom and gloom and recessionary factors pushing down inflation but hopefully you will not fall for it again? Surely?

It will be 0.5% and yes it will drag us into November. So another 2 months with very low interest rates.

More interestingly I have penciled in November for when Bailey gets tha sack.

If I was Bailey, Id be pushing for 1%, to try and avoid that outcome.

Where else would a crap CB get employment?

 

 

[spyguy]

For the BoE -and the rest - its not really about inflations. Its about currency v $ and stopping the £ falling.

[steve99]

1 hour ago, Chunketh said:

Some people just want to watch the world burn.

No, just house price speculators, landlords, billionaires, Tories and brexiteers. 

[Flat Bear]

Just now, spyguy said:

If I was Bailey, Id be pushing for 1%, to try and avoid that outcome.

Where else would a crap CB get employment?

 

 

Spyguy you are right. You know you are right and I know you are right. It would be the least that should be done.

BUT Bailey an Co will not do it.

[FallingAwake]

1 minute ago, steve99 said:

No, just house price speculators, landlords, billionaires, Tories and Remainers desperately hoping for the UK to do badly so they can "told ya so". 

Corrected your error.

[steve99]

Just now, spyguy said:

For the BoE -and the rest - its not really about inflations. Its about currency v $ and stopping the £ falling.

Very much so. the £ has lost a lot since the brexit vote and never recovered. As the UK has become a much smaller entity in the world it is important to keep the £ from slipping further, we have no commodities to sell off for foreign currency balance of payments (as Australia does), nor too much in the way of manufactured goods to sell cheap to the rest of the world.