Bank of England May Ir Vote - 9-0 For The Hike!

[TwentyOneEleven]

http://www.bankofengland.co.uk/publication...007/mpc0705.pdf

38 The Governor invited the Committee to vote on the proposition that Bank Rate should be

increased by 25 basis points to 5.5%. The Committee voted unanimously in favour of the proposition.

[0q0]

BBC News reports all the BoE said "Up!"

[Gone baby gone]

Interesting - I guess a 0.5% rise is no longer out of the question then.

[Guest The_Oldie]

Sterling on the way up..

http://newsvote.bbc.co.uk/1/shared/fds/hi/...12/intraday.stm

[Guest grumpy-old-man]

yes, but I have been told by a couple of posters on here that IR's have peaked.

well, well, even Blanchy has voted for a rise, is this the first time he has ?

edited: "The May Inflation Report forecast was conditioned on the market’s expectations of interest rates –

which implied an immediate increase of 25 basis points with a high probability of another rise later in

the year. If the Committee had been reasonably confident about the need for another interest rate rise

soon, then a strong case could have been made for an increase of 50 basis points this month."

oh dear.

Edited May 23, 2007 by grumpy-old-man

[Guest The_Oldie]

From the minutes..

Key downside risks included the interaction of higher short-term interest rates with the

growing domestic debt burden and the possibility of slower growth in the United States triggering a

global slowdown.

[pootle]

The May Inflation Report forecast was conditioned on the market’s expectations of interest rates –

which implied an immediate increase of 25 basis points with a high probability of another rise later in

the year. If the Committee had been reasonably confident about the need for another interest rate rise

soon, then a strong case could have been made for an increase of 50 basis points this month. But those

members who had considered voting for 50 basis points preferred to wait for more data to assess the

impact of past increases in Bank Rate. Some members argued that, given the uncertainties around both

the outlook for inflation and the impact of interest rate changes, it was better to move cautiously. Other

members were concerned that any excessive movement in rates could create downside risks to growth

and so to the medium-term outlook for inflation. The Committee agreed that, should the economy

continue to develop broadly in line with the central expectation, Bank Rate could be raised further as

necessary.

[Luminist]

As I have said before in the past, I believe that the interest rate policy of the banking system is to:

Set the interest rates to the highest possible, for as long as possible, on the maximum debt load possible.

This would be the profit-maximising tactic of the banking sector. All the rest of the economics speak is just window dressing

Best,

L

Source: http://www.housepricecrash.co.uk/forum/ind...mp;#entry513165

[Levy process]

http://www.bankofengland.co.uk/publication...007/mpc0705.pdf

GAME ON!

[onrollover]

GAME ON!

Woo HOO

they did talk about a 0.5%.

My money is on 0.25% at the next sitting.

[matt173407]

so what does this actually mean, will this force lower prices , will this stop people paying over the top for property ?

[IWantItNow]

so what does this actually mean, will this force lower prices , will this stop people paying over the top for property ?

No....it just means that people who have stretched themselves to by a home face financial ruin. Something that some people on this site seem to revel in.

[Guest The_Oldie]

so what does this actually mean, will this force lower prices , will this stop people paying over the top for property ?

It seems to be indicative that interest rates will go higher this year. Higer interest rates will reduce liquidity, thus putting pressure on prices.

[Willy Weasel]

I think this is the most important sentence from the minutes:

The Committee agreed that, should the economy continue to develop broadly in line with the central expectation, Bank Rate could be raised further as necessary.

In other words, the MPC's central projection requires rates to increase, never mind if some of the upside risks develop.

IMHO 6.25% by the end of the year

[Furby]

I think this is the most important sentence from the minutes:

The Committee agreed that, should the economy continue to develop broadly in line with the central expectation, Bank Rate could be raised further as necessary.

In other words, the MPC's central projection requires rates to increase, never mind if some of the upside risks develop.

IMHO 6.25% by the end of the year

Agreed.

F

[OzzMosiz]

Bloody hell. I am stunned that Davey-boy Blanchflower voted for a rise. This is a first.

So how the hell does he explain his vote for cuts recently?

Sack him!

[oblomov]

its a bit spooky Blanchflower voting for a rise

calls to mind the saying "when the last bear turns bull..."

i do hope it doesnt mark the top for rates

[OnlyMe]

Bloody hell. I am stunned that Davey-boy Blanchflower voted for a rise. This is a first.

So how the hell does he explain his vote for cuts recently?

Sack him!

Gordon in place, job done.

Economy ******ed.

[davros]

its a bit spooky Blanchflower voting for a rise

calls to mind the saying "when the last bear turns bull..."

i do hope it doesnt mark the top for rates

Not a chance. The Inflation Report seemed pretty conclusive in that IR's pretty much have to go at least as high as 5.75% - as an absolute minimum.

[Levy process]

No....it just means that people who have stretched themselves to by a home face financial ruin. Something that some people on this site seem to revel in.

... as opposed to the situation over the last 5 years where people that weren't prepared to fecklessly stretch themselves in the face of possible cost increases caused by the inevitable interest rate rises, constantly faced being denied access to property ownership. Something that smug BTL merchants and their like, as they crowed about "better not miss the boat" etc, seemed to revel in

This issue has been covered at length on here. A large part of the premise of this site regards the injustice of people who fecklessly take financial risks being constantly bailed out by one of several different mechanisms, artificially suppressed interest rates being but one, while the prudent get punished as a direct result of this, in that the imprudent get to enjoy upsides of many risks while being artifically shielded from the downsides. So while very few (any?) would actually derive any pleasure directly from the personal financial pain about to be suffered by others, they are pleased that finally it looks like the prudent will be rewarded, and risk will once again balance reward.

Edited May 23, 2007 by Levy process

[christhpc]

... as opposed to the situation over the last 5 years where people that weren't prepared to fecklessly stretch themselves in the face of possible cost increases caused by the inevitable interest rate rises, constantly faced being denied access to property ownership. Something that smug BTL merchants and their like, as they crowed about "better not miss the boat" etc, seemed to revel in

This issue has been covered at length on here. A large part of the premise of this site regards the injustice of people who fecklessly take financial risks being constantly bailed out by one of several different mechanisms, artificially suppressed interest rates being but one, while the prudent get punished as a direct result of this, in that the imprudent get to enjoy upsides of many risks while being artifically shielded from the downsides. So while very few (any?) would actually derive any pleasure directly from the personal financial pain about to be suffered by others, they are pleased that finally it looks like the prudent will be rewarded, and risk will once again balance reward.

Good post, Levy.

And a unanimous decision - I don't think we've had one of those for a while! This is interesting. Once I've taken in some more caffiene I'll have a go at deciphering those minutes myself.

[Disillusioned]

Is there any mention of the actual votes for a 0.5 rise? I can't find anything other than:

For some members, the question was whether Bank Rate should be increased by 25 basis

points or whether there was a case for a rise of 50 basis points – given the upside risks to inflation over

the medium term and the buoyant outlook for growth and demand.

If the Committee had been reasonably confident about the need for another interest rate rise

soon, then a strong case could have been made for an increase of 50 basis points this month. But those

members who had considered voting for 50 basis points preferred to wait for more data to assess the

impact of past increases in Bank Rate. Some members argued that, given the uncertainties around both

the outlook for inflation and the impact of interest rate changes, it was better to move cautiously. Other

members were concerned that any excessive movement in rates could create downside risks to growth

and so to the medium-term outlook for inflation. The Committee agreed that, should the economy

continue to develop broadly in line with the central expectation, Bank Rate could be raised further as

necessary.

[Guest grumpy-old-man]

I think this is the most important sentence from the minutes:

The Committee agreed that, should the economy continue to develop broadly in line with the central expectation, Bank Rate could be raised further as necessary.

In other words, the MPC's central projection requires rates to increase, never mind if some of the upside risks develop.

IMHO 6.25% by the end of the year

me too.

[Guest d23]

Is there any mention of the actual votes for a 0.5 rise? I can't find anything other than:

no one voted for a .5% rise; some apparently considered it but preferred to wait for more data but theres no mention of how many

[Guest Charlie The Tramp]

IMHO 6.25% by the end of the year

With a 8% plus mortgage rate.