Marcos Scriven Posted September 18, 2007 Share Posted September 18, 2007 (edited) I'm confused... Are we looking at short-term cuts, followed by inflation, and increasing rates? Greenspan says we're looking at inflation and higher interest rates, but fixed rates mortgages are going *down* slightly at the moment. Edited September 18, 2007 by Marcos Scriven Quote Link to comment Share on other sites More sharing options...
Marcos Scriven Posted September 18, 2007 Author Share Posted September 18, 2007 Anyone? Quote Link to comment Share on other sites More sharing options...
OzzMosiz Posted September 18, 2007 Share Posted September 18, 2007 If the BoE have any sense they will remain 'vigilant', i.e. do nothing, based on the CPI figures. I'd personally like to see the ONS disconnected from government control. Quote Link to comment Share on other sites More sharing options...
Ducardo Posted September 18, 2007 Share Posted September 18, 2007 I'm confused...Are we looking at short-term cuts, followed by inflation, and increasing rates? Greenspan says we're looking at inflation and higher interest rates, but fixed rates mortgages are going *down* slightly at the moment. Down about to about 5% early next year Quote Link to comment Share on other sites More sharing options...
Moo Posted September 18, 2007 Share Posted September 18, 2007 Hold until after Xmas, unless something else utterly unpleasent happens in the meantime. Given that they didn't cut last time* with a benign looking CPI figure, I can't seem there being any pre-Xmas cuts (or raises for that matter). With actual lending rates as far detached as they are, I suspect the name of the game will be to make it look like it's "business as usual, nothing to see here, we'd have moved rates if we were worried, wouldn't we? Hey! Look! Eastenders is on". * Am I correct in assuming that the MPC pretty much know the upcoming Chinese Price Index figure for the month at rate setting time? Quote Link to comment Share on other sites More sharing options...
Guest Skint Academic Posted September 18, 2007 Share Posted September 18, 2007 Even if the BofE cut interest rates would it really have much effect anymore? Banks are worried about lending money now there's a credit crunch occurring and people are worried about their deposits, confidence is shattered in the housing market, prices are falling but the cost of living is rising (even if the official rate of inflation is falling!) So a small cut in interest rates may be seen as a way of easing the tension out there and sustaining the bubble and Gordon Brown's reputation. They might be trying for a soft landing (as if such a thing is possible). But if they do this then it will be after a sustained period of wait-and-see. Quote Link to comment Share on other sites More sharing options...
Marcos Scriven Posted September 18, 2007 Author Share Posted September 18, 2007 Down about to about 5% early next year Would that not caused a) cheaper mortgages and b)eroding mortgages - thus catalysing new house price growth? Quote Link to comment Share on other sites More sharing options...
what Posted September 18, 2007 Share Posted September 18, 2007 If you look at the pound against the Euro 1.4377, a few months ago it was 1.52. The pound will tank very soon. Quote Link to comment Share on other sites More sharing options...
Guest pioneer31 Posted September 18, 2007 Share Posted September 18, 2007 Down about to about 5% early next year It'll make no difference. Public confidence is dissolving. Large queues of panicky bank customers is proof of that. Quote Link to comment Share on other sites More sharing options...
the_duke_of_hazzard Posted September 18, 2007 Share Posted September 18, 2007 My gut feeling based on absolutely no evidence and my limited knowledge is that they will hold for as long as possible, maybe cut once then. They've had their fingers burned and the hawks will be arguing for medium term rises, and this time government will listen, since they don't want a repeat of what's just happened. Thatch's monetarism may have made her look nasty, but it never made her look incompetent. Quote Link to comment Share on other sites More sharing options...
Guest pioneer31 Posted September 18, 2007 Share Posted September 18, 2007 (edited) Well I think so. I'm rather surprised at the extent of the herd mentality. After being told 112 times that the money is safe, people are still getting up at 5am to queue at the NR. This episode has enlightened me to something I wasn't aware of. The mass public are incredibly stupid. p.s. Did anyone see the woman who announced to national TV camera's that she has £750,000 in the NR......and then went onto say 'may as well put it under the doormat like my mother used to'. Give me strength. Edited September 18, 2007 by pioneer31 Quote Link to comment Share on other sites More sharing options...
Smarter than the average bear Posted September 18, 2007 Share Posted September 18, 2007 Back to 5% by this time next year. Quote Link to comment Share on other sites More sharing options...
Guest DissipatedYouthIsValuable Posted September 18, 2007 Share Posted September 18, 2007 Anyone? I'm betting on a drop. I'm holding some Swiss Francs as a stable currency hedge against a devaluing pound. IF we weren't being run by Lysenkoists we'd have had a decent inflation index taking into account the prices of staple human needs like housing, energy etc. Then it would make sense to have the Bank of England controlling interest rates for the greater good. They would be able to increase interest rates without fear of massive mortgage defaults and business collapse. We have the CPI. It's a basket of goods which don't reflect the reality of inflation for us at all. Hence we've had a lunatic increase in shelter costs, aided and encouraged by this government. This does not benefit society in any way. Part of my move into another currency is an attempt to minimise losses about to occur, but mainly it's a token way of saying I don't trust the currency, economy or government here. The ONLY reason I remain in this country is to finish servicing my debts which are in Sterling over the next year or so. Because Sterling is artificially high, it makes it difficult to service debts in it from another country. If this changes and Sterling drops, I'll be out of here quicker. Quote Link to comment Share on other sites More sharing options...
Guest pioneer31 Posted September 18, 2007 Share Posted September 18, 2007 I think the Boe will do what they're best at - sit on their hands Hold for the foreseeable Quote Link to comment Share on other sites More sharing options...
Guest AuntJess Posted September 18, 2007 Share Posted September 18, 2007 Hold until after Xmas, unless something else utterly unpleasent happens in the meantime. Given that they didn't cut last time* with a benign looking CPI figure, I can't seem there being any pre-Xmas cuts (or raises for that matter). With actual lending rates as far detached as they are, I suspect the name of the game will be to make it look like it's "business as usual, nothing to see here, we'd have moved rates if we were worried, wouldn't we? Hey! Look! Eastenders is on".* Am I correct in assuming that the MPC pretty much know the upcoming Chinese Price Index figure for the month at rate setting time? LOL Love your signature! Quote Link to comment Share on other sites More sharing options...
Ducardo Posted September 18, 2007 Share Posted September 18, 2007 There has only been a run on one bank Quote Link to comment Share on other sites More sharing options...
Guest AuntJess Posted September 18, 2007 Share Posted September 18, 2007 I think the Boe will do what they're best at - sit on their handsHold for the foreseeable Better that they sit on them, than dip them into someone else's pocket! Quote Link to comment Share on other sites More sharing options...
Injin Posted September 18, 2007 Share Posted September 18, 2007 Up. Main problem now is savers withdrawing funds and sticking them under the matress. Banks won't lend to each other because it's not attractive enough to do so. Gotta make those two things attractive again or the whole gig is up. Quote Link to comment Share on other sites More sharing options...
benj Posted September 18, 2007 Share Posted September 18, 2007 As I've said in another thread, I would not be surprised to see a quick cut in the short term, that would be swiftly reversed once some sanity has returned to the credit markets. In the medium term, the only way is steady or upwards - there are just too many inflationary pressures on the horizon for lower rates to make sense. As others have pointed out, it's doubtful whether a cut now would have any real chance of filtering through to the wider economy in any significant way. Quote Link to comment Share on other sites More sharing options...
Guest Skint Academic Posted September 18, 2007 Share Posted September 18, 2007 Well I think so. I'm rather surprised at the extent of the herd mentality. After being told 112 times that the money is safe, people are still getting up at 5am to queue at the NR.This episode has enlightened me to something I wasn't aware of. The mass public are incredibly stupid. Or perhaps you haven't factored in how little people trust the government? (e.g. Iraq) Or that even though herd mentality may stem from an irrational belief, when enough people join the herd it becomes a self fulfilling prophecy and that following the herd can then become rational (e.g. buying a house when prices are beginning to rise, removing your savings at the beginning of a bank run etc) Or that people have very little to lose by moving their savings to another bank, but a lot to lose if the bank goes under. Or that people are essentially risk averse and are more able to appreciate the consequence of a risk than the probability of that consequence occurring (e.g. they can imagine losing all their savings but find it harder to judge the probability of this happening) Or that when it comes to a prisoner's dilemma, the chances of being shafted by a fellow prisoner increases the more prisoners there are (in this case the amount of other savers there are ready to look after themselves rather than Northern Rock) Or that banks have generated ill-will with their excessive bank charges and people might just like the idea of helping to bring it down. I reckon people withdrawing their deposits are very rational indeed. Quote Link to comment Share on other sites More sharing options...
PropertyMan Posted September 18, 2007 Share Posted September 18, 2007 I agree with the trust issue. But rational??? Queuing for ten hours yesterday before being turned away at closing time, only to return to start queuing at 1am this morning (as a woman interviewed on Today claimed) is a bloody long way from rational! Cheers! Quote Link to comment Share on other sites More sharing options...
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