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F. T.: Market Now Pricing In An I R Hike Before Year End

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http://news.ft.com/cms/s/3baf0e68-da42-11d...20abe49a01.html

Output and sales growth lifts chances of rate rise

By Jamie Chisholm, Economics Reporter

Published: May 3 2006 03:00 | Last updated: May 3 2006 03:00

Market expectations of a rise in interest rates rose yesterday with fresh evidence of an upturn in manufacturing and high street sales and strong mortgage lending.
Economists expect the Bank of England's monetary policy committee to leave interest rates unchanged when it meets on Thursday,
but money markets are pricing in a 0.25 percentage point increase by December.

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http://news.ft.com/cms/s/3baf0e68-da42-11d...20abe49a01.html

Output and sales growth lifts chances of rate rise

By Jamie Chisholm, Economics Reporter

Published: May 3 2006 03:00 | Last updated: May 3 2006 03:00

Market expectations of a rise in interest rates rose yesterday with fresh evidence of an upturn in manufacturing and high street sales and strong mortgage lending.
Economists expect the Bank of England's monetary policy committee to leave interest rates unchanged when it meets on Thursday,
but money markets are pricing in a 0.25 percentage point increase by December.

Either they shove that interest up to 6% or we may have to fill our cars up with milk from the fraudulent basket of CPI shame. I cannot understand why wage growth is so tame. Are the figures being fixed?

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Two points here really. Yes, the figures are rigged when it comes to inflation. More so under this Government than any for 20 odd years.

The other point is that a .25% increase in base rates will not affect the market. Been here, heard that. Never happened. It was a non event before, and if/when it happens, it'll be a non event again.

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Two points here really. Yes, the figures are rigged when it comes to inflation. More so under this Government than any for 20 odd years.

The other point is that a .25% increase in base rates will not affect the market. Been here, heard that. Never happened. It was a non event before, and if/when it happens, it'll be a non event again.

.25% will simnply put us back where we were almost a year ago and which re-ignited HPI and MEW. With the world moving upwards much faster than the BoE are thinking a .50% hike seems more likely--unless Gordon thinks devaluing the wildly overpriced pound is called for to make exports competitive.

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The other point is that a .25% increase in base rates will not affect the market. Been here, heard that. Never happened. It was a non event before, and if/when it happens, it'll be a non event again.

I seem to recall the 0.25% interest rate cut in August inflating a market that was stagnating nicely. A change in direction can affect expectations...

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IMHO _any_ rate rise will kill the market immediately: there's no sane reason whatsoever to buy at these prices if rates are going up.

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Just watched BBC News 24 and they spoke to a guy from Nationwide (I think). He quite clearly mentioned a rate change by the year end. He also stated that a reduction in rates as predicted earlier this year was unlikely.

I suppose the bulls out there who voiced the rate reduction mantra have excepted its not looking likely.

Mr Joe.

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An interest rate move upwards would shock the public. Why?

  • Most of the media has been talking about rate cuts since the start of the year. Even now, alot of the media won't say rates may go up.
  • Nationwide Survey today reports 10% expect rates to go down tomorrow, with 90% expecting no change.

So what's different since last summer? Higher living costs, more consumer debt, 'higher' house prices. Wage inflation of 3.8% probably doesn't balance the above, so if rates were 4.75% the housing market would be worse off than last summer - IMHO!

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Shock at the return to 4.75%? How will 5% feel? People have very short memories but they will be reminded again in the near future.

Go back to 3.5% and remember how much cheaper house prices were then than now? Still over priced but the momentum of historically low borrowing costs dominoed. This caused property prices to rise even as rates slowly moved up.

2008 and the comparison to today’s market will be clear IMO.

Mr Joe.

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Channel 4 News has just reported than 30 banks (10 of them majors) have lowered their saving rates by as much as 0.5%.

Why have they done this ?, Are they thinking IR are going to rise and lowering first because and IR rise will put pressure on them to up the savings rate ?

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Channel 4 News has just reported than 30 banks (10 of them majors) have lowered their saving rates by as much as 0.5%.

Why have they done this ?, Are they thinking IR are going to rise and lowering first because and IR rise will put pressure on them to up the savings rate ?

No. They just dont like GIVING us money. They only want to be GIVEN money.

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No. They just dont like GIVING us money. They only want to be GIVEN money.

Could be indirectly related to the BoJ tightening on 20th March--taken this long to filter through to the banks who have been using cheap money to sell on to their customers? As the BoJ tightens up go the rates in the UK regardless of the BoE's fence sitting.

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IMHO _any_ rate rise will kill the market immediately: there's no sane reason whatsoever to buy at these prices if rates are going up.

I know a few people who have bought recently, none of them know what base rates are, where they've been and they certainly don't have an opinion of where they're likely to go.

They just see what the maximum is they can borrow, buy a property, then when their first mortgage payment arrives see how much they've got left to get them through to the next pay day.

I agree there is no sane reason to buy at these prices if rates are going up, however we don't know that rates will rise with any significance, and even if we knew they were, plenty would still buy now - suffer later.

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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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