Barclays Bank: I R To Rise To 6% This Year

[Realistbear]

http://today.reuters.com/investing/finance...ED-BARCLAYS.XML

Inflation prompts Barclays to raise rate forecasts

Thu Jun 22, 2006 9:58am ET

NEW YORK, June 22 (Reuters) - Barclays has become the latest investment bank to revise up its forecasts for interest rates set by the Federal Reserve, citing upward shifts in their own forecasts for underlying inflation.

"We now project that the Federal Open Market Committee will raise the federal funds rate to

6.0 percent

this year, up from our previous estimate of 5.5 percent," Barclays Capital economists said in a research note.

With Gordon standing pat the world may just pass him by.

[Jason]

Crikey.

Edited June 22, 2006 by Jason

[lulu]

OK, call me thick if you want but can someone explain to me exactly what the implications would be of the UK not moving their interest rate higher whilst everyone else in world raises theirs?

Ta

[OnlyMe]

Another Barclays news item. Inflation combined with wage deflation, nasty. Obviously didn't have the contacts at the immigration department to fudge a visa

http://www.iomonline.co.im/ViewArticle2.as...ticleID=1581367

BANK BOSS IN ILLEGAL IMMIGRANT SCANDAL

ILLEGAL immigrants from South Africa were flown in by a bank boss to work on his house for as little as £1.36 an hour.

..

He resigned from Barclays Bank — where he was a senior manager — the day before his court appearance.

Edited June 22, 2006 by OnlyMe

[Realistbear]

OK, call me thick if you want but can someone explain to me exactly what the implications would be of the UK not moving their interest rate higher whilst everyone else in world raises theirs?

Ta

1 U.K. £ =

1 1.8285

Sterling dropped 200 points on the news of Walton dying. Since it is now less likely that Gordon will have to raise rates and the US going skyward the pound will not be an attractive place for investors to park their money. IF the pound crashes inflation at the current rates will be a fond memory of a summer's opportunity lost.

Gordon wants No. 10--badly. If he hikes rates the house market will wobble and as it is HPI that has kept his miracle going for all these years he cannot afford any negative signals coming from that quarter. At least, not until he is safely behind his new desk as PM. The market will crash, no matter what Gordon does or does not do, he can delay it but cannot eliminate it.

[Bingley Bloke]

OK, call me thick if you want but can someone explain to me exactly what the implications would be of the UK not moving their interest rate higher whilst everyone else in world raises theirs?

Ta

Basically, the higher interest rates go in any country the more valuable that country's currency becomes. If everyone else puts their rates up and we don't Sterling will fall in value relative to their currencies. What with our manufacturing industry pretty much gone and a big chunk of our service sector offshored to places like India we are basically using our pounds to buy the currency of the places from which we are buying the stuff we import to pay the people who provide that stuff. If we stand still and Sterling falls relative to those currencies we will have to spend more pounds to buy the foreign currency we pay for the stuff we import, hence inflation, hence sharp rate rises to strengthen the pound and bring these costs down again. Alternately we can edge rates up now to maintain the equilibrium, thus negating the sharper rises that would otherwise be needed later when we have to play catch-up.

[Patience is a virtue isn't it!]

Basically, the higher interest rates go in any country the more valuable that country's currency becomes. If everyone else puts their rates up and we don't Sterling will fall in value relative to their currencies. What with our manufacturing industry pretty much gone and a big chunk of our service sector offshored to places like India we are basically using our pounds to buy the currency of the places from which we are buying the stuff we import to pay the people who provide that stuff. If we stand still and Sterling falls relative to those currencies we will have to spend more pounds to buy the foreign currency we pay for the stuff we import, hence inflation, hence sharp rate rises to strengthen the pound and bring these costs down again. Alternately we can edge rates up now to maintain the equilibrium, thus negating the sharper rises that would otherwise be needed later when we have to play catch-up.

Nice post. Thanks for clearing that up. So basically GB would be stupid to sit still if the US and Europe move their Interest Rates up to 6%?

[pootle]

Nice post. Thanks for clearing that up. So basically GB would be stupid to sit still if the US and Europe move their Interest Rates up to 6%?

Hmmm, I wonder what the odds are that GB sits still and does something stupid then....

[Realistbear]

Nice post. Thanks for clearing that up. So basically GB would be stupid to sit still if the US and Europe move their Interest Rates up to 6%?

No. 10 beckons. When you have power in mind everything else pales into insignificance. Gordon will be busy working out how to get into No. 10, keep IR where they are, and not trigger a sterling crisis. Manipulating the employment data, encouraging mass immigration and moving the goals posts for inflation (or continuing to remove items that have gone up in price from the CPI "basket")may help him in the short term but there will come a point when the markets will rumble the Miracle Economy for what it is: HPI and MEW based on cheap credit.

[TwentyOneEleven]

..and this new (forecast) US IR rate will also be very good news to Barclays on their (agreed) acquisition of the US mortgage servicing business of HomEq Servicing Corporation...http://www.investegate.co.uk/Article.aspx?...06221700030426F

I wonder if they'll finally start paying me a decent IR on my account now? Hold on, is that a flying pig?...

[Marina]

With Gordon standing pat the world may just pass him by.

or .... with Gordon standing by the world may just piss on him by the way.

Nice post. Thanks for clearing that up. So basically GB would be stupid to sit still if the US and Europe move their Interest Rates up to 6%?

You don't want to take everything you read here at face value. Sometimes, in the real world, things have a habit of not obeying the rules.

Not very long ago sterling was at 1.72. All the finance ministers on here were saying 'our interest rates must go up NOW to protect sterling'. Every twitch down in sterling met with a daily chorus of more DEFINITE predictions of rate rises. Yet, despite the fact the the US have since raised their rates (again), despite them (unusually) having a higher base rate than us - sterling has broken the rules and appreciated against the dollar.

If the yanks go to 6% - recent history suggests that, oddly, it may have little effect on sterling. Worst case, it might bring it down to where it was as little as a few weeks ago.

Big deal? No.

The world seems to be changing. The old rules and expectations are being challenged. The lack of FTBs in the property market is no longer a consideration as investors continue to take up the slack.

Brave new world coming soon - where 20% of the people will own all the property - and you'll rent it from them all your lives.

Edited June 22, 2006 by Marina

[Panda]

The lack of FTBs in the property market is no longer a consideration as investors continue to take up the slack.

Brave new world coming soon - where 20% of the people will own all the property - and you'll rent it from them all your lives.

An investment is only as good as its yield, and it don't look good from where i am.

Nothing new about this current and future world, the cycle is just dragging it heels a little, the trough will come, because we have most definately passed the peak, you cannot kid a kidder

[Realistbear]

or .... with Gordon standing by the world may just piss on him by the way.

You don't want to take everything you read here at face value. Sometimes, in the real world, things have a habit of not obeying the rules.

Not very long ago sterling was at 1.72. All the finance ministers on here were saying 'our interest rates must go up NOW to protect sterling'. Every twitch down in sterling met with a daily chorus of more DEFINITE predictions of rate rises. Yet, despite the fact the the US have since raised their rates (again), despite them (unusually) having a higher base rate than us - sterling has broken the rules and appreciated against the dollar.

If the yanks go to 6% - recent history suggests that, oddly, it may have little effect on sterling. Worst case, it might bring it down to where it was as little as a few weeks ago.

Big deal? No.

The world seems to be changing. The old rules and expectations are being challenged. The lack of FTBs in the property market is no longer a consideration as investors continue to take up the slack.

Brave new world coming soon - where 20% of the people will own all the property - and you'll rent it from them all your lives.

Is the same thing as the "new paradigm" that Rightmove mentioned in their March report? I always wondered what that mean't.

David's death did seem to knock the pound 200 points today as the market noted that the only Hawk was no longer an influence on the muppets, er MPC.

1 U.K. £ =

1 1.8284

Edited June 22, 2006 by Realistbear

[Guest Bart of Darkness]

No. 10 beckons. When you have power in mind everything else pales into insignificance.

Including the best interests of the country it seems.

[Guest]

Is the same thing as the "new paradigm" that Rightmove mentioned in their March report? I always wondered what that mean't.

Marina is a senile old fool who thinks that things are just going to be all alright.

A bit like Realist Bear who's incessant ramblings about Gordon Brown being Prime Minister overlook the distinct possibility that the KNIVES might COME OUT in the Labour Party for the fat scottish f**k just as soon as the takeover game is ON.

Has it occurred to anyone that Tony is a VERY UNPOPULAR prime minister because of the weapons of mass destruction affair that led to the very suspicious death of a weapons expert on british soil, and (further away from home where we don't give a shit) the invasion of a country causing death and destruction to an already oppressed innocent peoples? And his wife has a big mouth.

- BUT -

TONY IS STILL THE F**KING PRIME MINISTER???????

WHY???

- ANSWER -

Because there IS NOBODY BETTER IN THE LABOUR PARTY THAN TONY BLAIR for the role of Prime Minister.

YesI know this is saying a LOT, but this is the truth of the matter.

The Labour Party have a bunch of vile deadbeats to choose from. None of whom are evidently suitable to replace this man who's name is corrupted to BLIAR more times than the Daily Mail run stories of twenty one year old "paedos" shagging fourteen year olds.

It's about time some people on this forum started getting a f**King grip, or I'm back to consa's.

The yanks are not over with raising the rates.

The reason we're all so tetchy - including the bulls - is because they're not just f**king getting on with the job.

In the meantime, Marina will entertain us with posts about how f**ked today's seventeen year olds are, Brainclamp will entertain us with posts about how 30,000,000,0000,00,000,000 immigrants per second will be living in your dad's 30 trillion BTL apartments, Europa will entertain us with stories of how shit white male 30 year old Englishmen are at doing - er- anything, and how they need to be replaced with Polish women for 50p a year.

Edited to enclose "paedos" in quotes so as to poke fun at the idea that this is what happens in every inner city area.

Edit 2- and FURTHER to this we now have to live through the conspiracy theories surrounding the death of David Walton, and how the state "murdered" him because they didn't want him to vote for an interest rate rise, when in reality a clapham common rent boy and a pink feather boa and a seedy edit on Photoshop released by Downing Street and leaked to the press would have done the job without a man having to die. Let's get a grip.

Edit 3 - I mispelled the mispelling of "BLAIR". Maybe Europa is right and I am shit after all.

Edited June 22, 2006 by megaflop

[Marina]

Marina is a senile old fool who thinks that things are just going to be all alright.

Wow, what a complete and utter pillock you are! I think things are just going to be alright? I think things are going to be the absolute opposite of alright! I think you are going to be still paying rent when they nail you in your box. And the rest of your generation likewise. But you seem to be too dumb and, I would suggest, prematurely senile, to observe what is happening in the world around you.

1) Property prices have not come down

2) There are bugger all FTBs buying

3) FTBs are redundant because BTL investors are still investing - you might not like it or believe but they've bought every flat around here

4) More and more property is moving into the hands of investors

5) More and more investors are increasing their portfolios

6) There seems to be an endless supply of new BTL investors - so FTBs are not needed any more. Investors can sell to each other.

By the time you are my age you'll be thinking 'you know we should have DONE something about this all those years ago - instead of whining like morons on a forum and thinking we understood economic systems so well that we couldn't possibly be wrong.

Look at what the pound has done over the last few weeks for feck's sake. It's gone UP against the dollar when they were RAISING rates. Doesn't fit in with your economic model - does it?

A bit like Realist Bear who's incessant ramblings about Gordon Brown being Prime Minister overlook the distinct possibility that the KNIVES might COME OUT in the Labour Party for the fat scottish f**k just as soon as the takeover game is ON.

Has it occurred to anyone that Tony is a VERY UNPOPULAR prime minister because of the weapons of mass destruction affair that led to the very suspicious death of a weapons expert on british soil, and (further away from home where we don't give a shit) the invasion of a country causing death and destruction to an already oppressed innocent peoples? And his wife has a big mouth.

- BUT -

TONY IS STILL THE F**KING PRIME MINISTER???????

WHY???

- ANSWER -

Because there IS NOBODY BETTER IN THE LABOUR PARTY THAN TONY BLAIR for the role of Prime Minister.

YesI know this is saying a LOT, but this is the truth of the matter.

The Labour Party have a bunch of vile deadbeats to choose from. None of whom are evidently suitable to replace this man who's name is corrupted to BLIAR more times than the Daily Mail run stories of twenty one year old "paedos" shagging fourteen year olds.

It's about time some people on this forum started getting a f**King grip, or I'm back to consa's. You're not wanted at Consa's. Men of action only. Not tossers who have been brainwashed.

The yanks are not over with raising the rates.

The reason we're all so tetchy - including the bulls - is because they're not just f**king getting on with the job.

In the meantime, Marina will entertain us with posts about how f**ked today's seventeen year olds are, Brainclamp will entertain us with posts about how 30,000,000,0000,00,000,000 immigrants per second will be living in your dad's 30 trillion BTL apartments, Europa will entertain us with stories of how shit white male 30 year old Englishmen are at doing - er- anything, and how they need to be replaced with Polish women for 50p a year. And you'll fiddle with you dick while Rome burns. What a w@nker you are!

Edited to enclose "paedos" in quotes so as to poke fun at the idea that this is what happens in every inner city area.

Edit 2- and FURTHER to this we now have to live through the conspiracy theories surrounding the death of David Walton, and how the state "murdered" him because they didn't want him to vote for an interest rate rise, when in reality a clapham common rent boy and a pink feather boa and a seedy edit on Photoshop released by Downing Street and leaked to the press would have done the job without a man having to die. Let's get a grip.

Edit 3 - I mispelled the mispelling of "BLAIR". Maybe Europa is right and I am shit after all.

Edited June 22, 2006 by Marina

[rainbow]

Imo, the reason that rate rises in the USA are having little effect on sterling is simply because financially the USA is fu**ed. Every rise in rates over there seems to be followed by announcements of worsening budget and trade deficits, thereby nulifying the effects of the last rate rise.

If they could wave a wand to make their deficits disappear the dollar would go into orbit, and we would all be playing catchup, but I can't see this happening any time soon, probably not until the Democrats win the next Presidential Election on a campaign of returning America to a financially sound footing (unless George is made to bite that bullet first, by getting his ar$e kicked in the mid-terms)

[Realistbear]

Imo, the reason that rate rises in the USA are having little effect on sterling is simply because financially the USA is fu**ed. Every rise in rates over there seems to be followed by announcements of worsening budget and trade deficits, thereby nulifying the effects of the last rate rise.

If they could wave a wand to make their deficits disappear the dollar would go into orbit, and we would all be playing catchup, but I can't see this happening any time soon, probably not until the Democrats win the next Presidential Election on a campaign of returning America to a financially sound footing (unless George is made to bite that bullet first, by getting his ar$e kicked in the mid-terms)

The good thing about the US is they admit it when the economic cycle goes negative. In the Miracle Econmy the cycle has been done away with and things are good all the time.

Our deficit is getting worse by the day, unemployment rates are up with manufacturing and retail in terminal decline and services haemoraging jobs daily, inflation is at least twice the CPI illusion, there is a chronic housing problem, personal debt exceeds 1.2 trillion pounds and some say this exceeds personal debt in the US making adjustments for population size and currency differentials.

When the currency traders see its time to dump sterling its going to be a short sharp and steep ride to the bottom. HPI and MEW never was a solid foundation upon which to build an economy, especially when all that cheap credit came from Asia who are now turning off the tap.

[AteMoose]

in the past uk IR rates havent been lower than us ones for long, *old graph need to update it ;p*

[Marina]

Imo, the reason that rate rises in the USA are having little effect on sterling is simply because financially the USA is fu**ed. Every rise in rates over there seems to be followed by announcements of worsening budget and trade deficits, thereby nulifying the effects of the last rate rise.

If they could wave a wand to make their deficits disappear the dollar would go into orbit, and we would all be playing catchup, but I can't see this happening any time soon, probably not until the Democrats win the next Presidential Election on a campaign of returning America to a financially sound footing (unless George is made to bite that bullet first, by getting his ar$e kicked in the mid-terms)

Which suggests to me a dis-engagement of the normal sterling/dollar relationship. It suggests to me that something has changed. Now I know you lot can't even conceive of any circumstances that would mean that something in the way economies work and inter-act can change - but there used to be 4 bucks to the pound you know.

Why can't a country run a deficit forever? We've been running one for a good while now but our currency has not devalued - we still get Chinese imports for tuppence farthing.

in the past uk IR rates havent been lower than us ones for long, *old graph need to update it ;p*

Absolutely. And if you looked at my posts of a year ago I was saying the same thing - 'only twice in the last 25 years have our rates been below the Yanks and then only for a very short period before the market 'corrected' them'

In the old days when the yanks put their rates up sterling went DOWN against the dollar - so we put our rates up to maintain the value of sterling.

Now - the US puts rates up and sterling goes UP against the dollar.

Kind of back to front isn't it? Makes you wonder if, and this is a tricky one to even consider, there is something different going on this time.

Maybe the yanks are in much bigger doo-dah than us (true) and, as a result, their base rate might be above ours for a few years. How would that be?

Err, we could carry on with low base rates - with sterling high against the dollar we still get cheap imports - so inflation stays low and - the bloody property market is unaffected and prices keep rising or, at least, do not fall at all.

Result? Day of reckoning postponed - possibly indefinitely - certainly for 5 years, maybe 10. In the meantime FTBs are priced out, investors buy up more of the UK's property - renting underclass continues to grow.

This thing looks unstoppable to me. Because you lot on here are fiddling while Rome burns.

Edited June 23, 2006 by Marina