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George Ldn

Interest Rate Cuts Ahead… Lots Of Them

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Economists at Citigroup, which itself has been buffeted by the subprime tornado, expect:

# the U.S. Federal Reserve to cut its key short-term rate, now at 2.25%, to 1% by mid-2008.

# the European Central Bank – which has been holding its key rate steady at 4% — to beginning cutting rates before the end of the second quarter and bring them to 3% by early 2009.

# the Bank of England, where the key rate is 5.25%, to cut rates to 3.75% by mid 2009.

# the Bank of Japan, which has been itching to raise rates from the current 0.5%, to leave them unchanged through 2009.

# the Swiss National Bank, where rates at now t 2.75%, to cut 2.5% at year end and then again to 2.25% in 2009.

# and the exception, the Royal Bank of Australia, which has been raising rates lately to fight inflation in the commodity-rich economy, to boost its key rate from 7.25% to 7.5% later this year.

http://blogs.wsj.com/economics/2008/03/20/...real_time_blogs

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Economists at Citigroup, which itself has been buffeted by the subprime tornado, expect:

# the U.S. Federal Reserve to cut its key short-term rate, now at 2.25%, to 1% by mid-2008.

# the European Central Bank – which has been holding its key rate steady at 4% — to beginning cutting rates before the end of the second quarter and bring them to 3% by early 2009.

# the Bank of England, where the key rate is 5.25%, to cut rates to 3.75% by mid 2009.

# the Bank of Japan, which has been itching to raise rates from the current 0.5%, to leave them unchanged through 2009.

# the Swiss National Bank, where rates at now t 2.75%, to cut 2.5% at year end and then again to 2.25% in 2009.

# and the exception, the Royal Bank of Australia, which has been raising rates lately to fight inflation in the commodity-rich economy, to boost its key rate from 7.25% to 7.5% later this year.

http://blogs.wsj.com/economics/2008/03/20/...real_time_blogs

Is it just me, or is this a moot point.

Cut rates all you like, if no money is being lent, who cares?

;)

:ph34r:

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yeah the cuts don't work

they just make things worse

but I know ill see ya face again

you seen the rates at zopa.com we are talking 8%+ for an unsecured loan "theres just not that much money about"

Edited by jonpo

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Is it just me, or is this a moot point.

Cut rates all you like, if no money is being lent, who cares?

;)

:ph34r:

Exactly - add the fact that the link between interest rates and mortgage rates is now being broken and it barely matters.

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Guest Charlie The Tramp
Rates always come down in a recession they never reinflate bubbles though.

Not if high inflation is frightening the children. ;)

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Exactly - add the fact that the link between interest rates and mortgage rates is now being broken and it barely matters.

Not for all borrowers. If you on a tracker or a discount rate linked to base rate, cuts in IR reduce your payments.

IMHO,the huge flock to fixed rates is often taken out by people at the wrong time.

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Too early to be smug, but I opted for a lifetime tracker for this very reason. I think the govt have boxed themselves into a corner with what they can do with rates, recession or no recession, the level of debt held by joe public could not be sustained at higher rates than we currently have.

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Economists at Citigroup, which itself has been buffeted by the subprime tornado, expect:

# the U.S. Federal Reserve to cut its key short-term rate, now at 2.25%, to 1% by mid-2008.

# the European Central Bank – which has been holding its key rate steady at 4% — to beginning cutting rates before the end of the second quarter and bring them to 3% by early 2009.

# the Bank of England, where the key rate is 5.25%, to cut rates to 3.75% by mid 2009.

# the Bank of Japan, which has been itching to raise rates from the current 0.5%, to leave them unchanged through 2009.

# the Swiss National Bank, where rates at now t 2.75%, to cut 2.5% at year end and then again to 2.25% in 2009.

# and the exception, the Royal Bank of Australia, which has been raising rates lately to fight inflation in the commodity-rich economy, to boost its key rate from 7.25% to 7.5% later this year.

http://blogs.wsj.com/economics/2008/03/20/...real_time_blogs

I think the consensus is for rates to be 4.75% this time next year

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Rates always come down in a recession they never reinflate bubbles though.

they can delay them for a time though

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Economists at Citigroup, which itself has been buffeted by the subprime tornado, expect:

# the U.S. Federal Reserve to cut its key short-term rate, now at 2.25%, to 1% by mid-2008.

# the European Central Bank – which has been holding its key rate steady at 4% — to beginning cutting rates before the end of the second quarter and bring them to 3% by early 2009.

# the Bank of England, where the key rate is 5.25%, to cut rates to 3.75% by mid 2009.

# the Bank of Japan, which has been itching to raise rates from the current 0.5%, to leave them unchanged through 2009.

# the Swiss National Bank, where rates at now t 2.75%, to cut 2.5% at year end and then again to 2.25% in 2009.

# and the exception, the Royal Bank of Australia, which has been raising rates lately to fight inflation in the commodity-rich economy, to boost its key rate from 7.25% to 7.5% later this year.

http://blogs.wsj.com/economics/2008/03/20/...real_time_blogs

Every now and then we get posts like these, and everyone goes on the defensive. I remember not ten months ago we were looking at a base rate of around 6.25% here in the UK by Xmas 2007, then we were looking at a base rate of 4.75% by June 2008, now we are looking at a base rate of 3.75% by June next year.

Jesus Christ, it being Good Friday, if anyone could make such a stupid statement and then be correct well they would not be wasting their time posting on here or working in the investment banking industry, they would be holed up somewhere with enough cash to buy the UK outright.

Citigroup, remind me, what problems have they had recently, oh yes, short of cash, nothing like a vested interest trying to use their media voice to out the "SH!TS" up the prudent savers hey?

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probably due to the smell of desparation and wishful thinking in the air?

Nope, dont see that desperation on anyones posts, any chance you can clarify?

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Now THIS is and interesting picture form mish's blog recently

LINKY

It show the T-bill which is correlated closly with the CB IR, always goes down in reccesions(grey areas), reflecting a flight to safety/less demand for credit.

Also shows this environment is much more like the 1920s/30s than the 70s, pretty straightfoward veiw of a kondretieff cycle IMO. And another reason why were not in a real commodity bull or heading for hyperinflation. Because debt has to be purged from the system first and when that happens IRs on risky debt will rocket up like in the left circle on the chart.

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Nope, dont see that desperation on anyones posts, any chance you can clarify?

Why, are you stupid?

Edit: apologies - just seen you opted for a lifetime tracker - shouldn't even have asked if you are stupid

Edited by the end is nigh

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Economists at Citigroup, which itself has been buffeted by the subprime tornado, expect:

# the U.S. Federal Reserve to cut its key short-term rate, now at 2.25%, to 1% by mid-2008.

# the European Central Bank – which has been holding its key rate steady at 4% — to beginning cutting rates before the end of the second quarter and bring them to 3% by early 2009.

# the Bank of England, where the key rate is 5.25%, to cut rates to 3.75% by mid 2009.

# the Bank of Japan, which has been itching to raise rates from the current 0.5%, to leave them unchanged through 2009.

# the Swiss National Bank, where rates at now t 2.75%, to cut 2.5% at year end and then again to 2.25% in 2009.

# and the exception, the Royal Bank of Australia, which has been raising rates lately to fight inflation in the commodity-rich economy, to boost its key rate from 7.25% to 7.5% later this year.

http://blogs.wsj.com/economics/2008/03/20/...real_time_blogs

Would this report be produced by the same group of Economists at Citigroup who didn't see the current downturn coming and carried on buying subprime debt? :huh:

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Would this report be produced by the same group of Economists at Citigroup who didn't see the current downturn coming and carried on buying subprime debt? :huh:

Precisely!

This should probably be read more as a 'wishlist' of things citi desperately need to happen if they are to stand a cat in hells chance of surviving the current problems, nothing more. But it's like they say; if wishes were horses, beggars would ride and even if all these things do happen they're being very optimistic if they think it will be of much assistance.

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Guest Charlie The Tramp

Does anyone remember after that infamous cut in August 2005, did not Roger Bootle predict IRs would fall to 3.5% end 2006 ? :rolleyes:

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I see rates going higher next year. The secondary inflation from the credit expansion will be of similar magnitude to the asset inflation, hence higher rates.

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Now THIS is and interesting picture form mish's blog recently

LINKY

It show the T-bill which is correlated closly with the CB IR, always goes down in reccesions(grey areas), reflecting a flight to safety/less demand for credit.

Its a damn shame T-bill yields also plummeted towards 1% in 2002. He might have almost had an argument there. ;):lol:

Right now, the flight to treasuries is mearly a flight to safety at any cost.. The flight out of these into real assets will be truely spectacular.

Edited by narco

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  • 293 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
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