Boe Holds Back On Ir Rises Against Global Trend

[dnd]

People seem baffled by the Pounds strength at holding up despite the BOE policy of 'no change' - I personally think this is the strength of sterling at the moment, namely CONTINUITY and STABILITY which markets like. So Sterling stays strong because the BOE hold their nerve in uncertain times with a policy of wait-and-see rather than reacting too early to events and this is reassuring to foreign investors and the markets alike I think.

Or maybe, investers know that the BOE will hold out whatever happens because they have no choice in such as debt ridden unstable economy

[MarkG]

I personally think this is the strength of sterling at the moment, namely CONTINUITY and STABILITY which markets like.

Sterling is 'strong' (aka down against many, if not most, major currencies over the last year) because the markets are expecting rate rises. If they 'wait and see' much longer, it's going to start sinking again.

[BoredTrainBuilder]

The way I understand it if you have high GDP growth, this puts a strain on the resources available and this causes inflationary pressure hence an increase in interest rates. Why our intrest rates are highr than the eurozone.

Why immigration is such a good thing as I understand it. High GDP and still plenty of slack and hence low interest rates. A win win situation. Maybe the ecconomy could not grow fast enough when we were the sick man of europe? Restrictive immigration maybe?

There the limits of my understanding lies. I, like my namesake, am still trying to get to grips with all the supra national stuff. I would be happy to be enlightened.

That's about it. In the 1970s the economy was not flexible enough to respond to demand, hence inflation. Now it is much more flexible and, combined with globalisation lower the cost of imported goods demand can be met. Low inflation and low IRs. Indefinitely. And likewise with house porices. I'm afraid.

[Realistbear]

That's about it. In the 1970s the economy was not flexible enough to respond to demand, hence inflation. Now it is much more flexible and, combined with globalisation lower the cost of imported goods demand can be met. Low inflation and low IRs. Indefinitely. And likewise with house porices. I'm afraid.

Perpetual motion and the elimination of the economic cycle! Gordon may be in line for the Nobel Prize in economics.

The fly in the ointment is debt and Gordon's inability to dictate world IR. Globalisation has so far done little more than kept prices low and inflation high due to cheap imported goods which in turn has removed jobs from our economy. The other problem is that cheap goods are only cheap as long as the pound remains high and a high pound relies on a healthy economy not one plagued by twin deficts, low employment and inflation. Every perfect system has a flaw which is why boom and bust cannot be beaten. As the wise sage of Omaha said "you can't beat the market."

Stick to buy low and sell high and you won't go wrong. Wait too long and you lose.

[MarkG]

Low inflation and low IRs. Indefinitely.

That's the funniest thing I've read on this site in quite a while. Low inflation and low interest rates indefinitely in a fiat economy... you should do stand-up.

[BoredTrainBuilder]

That's the funniest thing I've read on this site in quite a while. Low inflation and low interest rates indefinitely in a fiat economy... you should do stand-up.

You just love that word, don't you. 'Fiat': a crappy brand of Italian car. Back in the real world US rates are peaking out, and here in the UK interest rates may rise a notch or two but not above 5% in any foreseeable future.

[Guest Charlie The Tramp]

You just love that word, don't you. 'Fiat': a crappy brand of Italian car. Back in the real world US rates are peaking out, and here in the UK interest rates may rise a notch or two but not above 5% in any foreseeable future.

When I took out my first mortgage in 1970 at 8.5% I was told they had peaked and soon would be coming down to 5% by the Woolwich. They never did apologise when base rates hit 15% and they charged 16.5% mortgage rate. Since then and witnessing high rates many times in the past 36 years I am now a sceptic. To me nothing is impossible.

[Pluto]

In my opnion the strength of sterling can be traced to worldwide central banks buying Pounds and Euros. They are being bought to enable a steady decline in the USD.

The higher interest rates in the US compared to the UK and Europe allows the dollar to devalue slowly and avoid a dollar crash.

This is why sterling is strong when:

+ UK Deficits are at an all time high;

+ Unemployment is climbing;

+ M4 figures are growing at 14%;

+ Asset inflation is rampant;

+ Manufacting is at an all time low as a percentage of GDP;

+ Commodity prices are escalating at an alarming rate;

+ Government debt is increasing;

+ Personal Mortgage Debt is at an all time high (10 X earnings);

+ Personal Bankrupcies are increasing at an alarming rate;

+ Corporate bankrupcies starting to rise;

+ Credit card debt more than all other Euro states combined;

+ Wages are not keeping pace with any of the above.