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Jason

Mpc June Minutes

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7 Short-term market interest rates had also been little changed on the month. At the time of the Committee's meeting, sterling market instruments implied an expectation of a 25 basis point rise in the

Bank of England's official rate by the end of 2006, with a second 25 basis point increase priced in by the end of 2007. While the majority of private sector economists surveyed in the Reuters poll, by

contrast, continued to expect the official rate to be unchanged during 2006, the proportion of respondents expecting a reduction in interest rates before the end of the year had fallen in recent

months, and there had been a rise in the proportion expecting the next change to be a rate increase.

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the minutes didn't really give much away, I had expected a slightly more hawkish tone now that steven Nickell has gone, but it reads as reasonably neutral and uncertain.

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7 Short-term market interest rates had also been little changed on the month. At the time of the Committee's meeting, sterling market instruments implied an expectation of a 25 basis point rise in the

Bank of England's official rate by the end of 2006, with a second 25 basis point increase priced in by the end of 2007. While the majority of private sector economists surveyed in the Reuters poll, by

contrast, continued to expect the official rate to be unchanged during 2006, the proportion of respondents expecting a reduction in interest rates before the end of the year had fallen in recent

months, and there had been a rise in the proportion expecting the next change to be a rate increase.

And your point? Only a couple of months ago you were betting with me that the next move in IR would be a cut. Do you really have any ability to make predictions of what will happen after a few months?

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And your point? Only a couple of months ago you were betting with me that the next move in IR would be a cut. Do you really have any ability to make predictions of what will happen after a few months?

LOL wasn't my point, it was the BOE point, it was the BOE point number 7.

I thought you were telling me the markets pricing in a rise by June.

Oh yes I recall the strange method, which makes no adjustments (as I've pointed out on numberous occassions). Let me see what the markets are pricing Short Sterling 95.250 June, so according the "the Strange" method, then the markets are still pricing in a rise this month LOL

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And your point? Only a couple of months ago you were betting with me that the next move in IR would be a cut. Do you really have any ability to make predictions of what will happen after a few months?

to be fair to KON, I think that is a fair representation of what the market expects at the moment. I've been expecting the next move to be up for the last 6 months - but I haven't been proved right or wrong yet either.

If the 7 members who voted no change have strong opinions, they didn't come across in those minutes. I bet on a July hike - may have to revise that now as the MPC are sounding pretty wishy washy at the moment. Despite their claims to be proactive, I think they'll wait until the market tells them what to do.

Edited by Sisyphus

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Can someone explain point 30 to me please?

"it was not clear if recent assest price falls .................."

Which assests is this refering to? Housing?

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Can someone explain point 30 to me please?

"it was not clear if recent assest price falls .................."

Which assests is this refering to? Housing?

Copper, Gold, Aluminium, and to a certain degree oil.

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Can someone explain point 30 to me please?

"it was not clear if recent assest price falls .................."

Which assests is this refering to? Housing?

Equities, i.e. stock markets.

At least it is now accepted rates will rise, the question is when. Compared to the bulls who were saying rates will go down in the summer :lol:

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to be fair to KON, I think that is a fair representation of what the market expects at the moment. I've been expecting the next move to be up for the last 6 months - but I haven't been proved right or wrong yet either.

If the 7 members who voted no change have strong opinions, they didn't come across in those minutes. I bet on a July hike - may have to revise that now as the MPC are sounding pretty wishy washy at the moment. Despite their claims to be proactive, I think they'll wait until the market tells them what to do.

Yeah, spot on Sisyphus. There is absolutely nothing proactive about the MPC. I think they realise that when they do what they have to do the results won't be pretty - therefore to protect themselves they are going to want to have some kind of irefutable reason for raising rates. Unfortunately this will probably be too little, too late

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At least it is now accepted rates will rise, the question is when. Compared to the bulls who were saying rates will go down in the summer :lol:

Yes it’s excepted that rates will go up 0.25% - not enough to start a crash – it seems unlikely that it will go over 5% in the next 2 years – It’s possible that oil etc will soon drop out of the CPI – which would mean IR drops – I personally can not see any trigger in Interest rates

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So everythings dandy in UK!

No signs of inflation in Browns Miracle Ecomomy - we are an island after all

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Yes it’s excepted that rates will go up 0.25% - not enough to start a crash – it seems unlikely that it will go over 5% in the next 2 years

Yeah, right. With interest rates looking to rise over 6% in America, they'll stay below 5% here. It really is all different this time.

It’s possible that oil etc will soon drop out of the CPI – which would mean IR drops

If oil going up in price by about 400% didn't cause inflation, why would oil dropping by 20% cause deflation? There's a huge amount of input price inflation which hasn't escaped into the general economy yet, and it's only a matter of time before it does... the longer rates are held low the worse it will be when the inflationary tsunami finally hits us.

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The MPC and Brown may be tempted to sneak a quarter point hike in while the football is on... ;)

If England win the Cup it would be an excellent decoy. I bet Brown, who has no interest in England or Football, is nevertheless angry that we lost Owen as the decoy looks a little less likley now.

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So everythings dandy in UK!

No signs of inflation in Browns Miracle Ecomomy - we are an island after all

Not quite what they are saying. They reckon the risks are balanced, inflation in some areas could be offset by deflation in other areas.

In any case, they are in no hurry to raise IRs.

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Guest grumpy-old-man

Not quite what they are saying. They reckon the risks are balanced, inflation in some areas could be offset by deflation in other areas.

In any case, they are in no hurry to raise IRs.

some simple questions:

why do we appear to be the only country that isn't raising IR ?

why are we the only european country that hasn't adopted the euro ?

we seem to suffer from similar or identical problems to other developed countries yet make the total opposite choices to them all !

is it just a simple answer, that we have the most devious & stupid politicians in comparison or is there some deeper more complicated economic reason ?

excuse my ignorance but I'm very new to a lot of the economic/stocks exchange etc, areas you cover on this site.

ps - not directed at you GS.

Edited by grumpy-old-man

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why do we appear to be the only country that isn't raising IR ?

Probably because our rates were comparatively high to begin with.

The US was at 1% for quite a while, similarly the EU was at 2%.

So you could argue that this gives us some extra breathing room.

why are we the only european country that hasn't adopted the euro ?

Maybe because we are separated from Europe by water, and also perhaps

because there was political opposition, or something.

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Guest grumpy-old-man

Probably because our rates were comparatively high to begin with.

The US was at 1% for quite a while, similarly the EU was at 2%.

So you could argue that this gives us some extra breathing room.

Maybe because we are separated from Europe by water, and also perhaps

because there was political opposition, or something.

ok, thanks for that..but

if those countries you have stated had IR much lower than us, then why are our property prices much higher in price in relation to earnings etc ? is that now just down to size of our country/land & very high immigration making everything artificially high.

and also, I thought our IR over the last few years have been the lowest since 1940 something, so therefore why arn't they going back to "normal" levels now.

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ok, thanks for that..but

if those countries you have stated had IR much lower than us, then why are our property prices much higher in price in relation to earnings etc ? is that now just down to size of our country/land & very high immigration making everything artificially high.

and also, I thought our IR over the last few years have been the lowest since 1940 something, so therefore why arn't they going back to "normal" levels now.

I don't have any statistics to hand, but I don't think there is that much difference in the earnings multiplier between countries.

If anything EU and America have had an even higher income-multiple to average house price ratio.

I base that on absolutely nothing, but I think it is quite possibly true.

In theory "hot money" should migrate to the country with the highest interest rate.

Huge amounts of hot money moving in or out of a country have the ability to move exchange rates massively.

For example new zealand & iceland recently.

Of course nothing is that simple anymore.

Maybe what other posters have been saying is true, and the MPC won't do anything

until the pound starts tanking on the markets. And with every successive interest rate

increase from other central banks it becomes increasingly likely.

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Mmmm - pretty interesting minutes, but the key seems to be in points 34 and 35. If we watch the developments in the points that they raise in 34 and 35, then this should give us an indication of which way rates are going to go.

All in all, it seems that rates are likely to remain at 4.5% for the foreseeable future and stability in the UK will continue, until something tips the balance one way or the other.

So with interest rates remaining stable, employment growing, economy growing, wages growing, I think we all know that houses prices are not going to crash.

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Guest Charlie The Tramp

An interesting documentary released by the BoE

A film about what the Bank of England does and why.

A lively drama documentary that explains how the Bank of England contributes to a healthy economy and what might happen if things were to go wrong.

The Governor and staff of the Bank explain how interest rates are set to keep inflation low and how that helps to protect the value of our money and keep the economy stable. They also explain the Bank's role in helping to maintain a stable financial system and why that is important to everyone.

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Mmmm - pretty interesting minutes, but the key seems to be in points 34 and 35. If we watch the developments in the points that they raise in 34 and 35, then this should give us an indication of which way rates are going to go.

All in all, it seems that rates are likely to remain at 4.5% for the foreseeable future and stability in the UK will continue, until something tips the balance one way or the other.

So with interest rates remaining stable, employment growing, economy growing, wages growing, I think we all know that houses prices are not going to crash.

Okay I give you two more years, but now will you please go back to the tree with a promise not to come back until then.

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  • 341 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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