Friday, June 20, 2008
Investors being told to expect rate rises
Are interest rate rises on the horizon?
"Looking further ahead, the next move is now expected to be a rate increase. As a consequence, swap rates, which reflect the cost of raising funds over specific time periods, have risen and there has been an increase in the price of fixed rate mortgages."
Posted by bidin'matime @ 01:48 PM (736 views)
4 thoughts on “Investors being told to expect rate rises”
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nooneo says:
Inflation, and the control of being the only remit of the MPC, well thats a yes then.
uncle tom says:
My take is that rates will rise, but probably not just yet. In the meantime I don’t see a fall.
The need to protect sterling and react to rising Gilt yields will ultimately force the MPC’s hand.
scandinavian pessimist says:
I could be wrong on this one but I think this kind of make sense:
Whilst low-income families are really struggling, people higher up the wage scale are doing just fine and it is this latter group that future rate hikes would be aimed at (the poor are squeezed enough by increased basic cost of living). Now, if the government had done their job and reduced the UK deficit during the ‘good decade’, they would now have been able to use fiscal stimulus and reduce the tax burden for low-income families, thus allowing the necessary rate hikes to take place. Instead the government is up their ears with debts themselves which means boe has to be really careful with the interest rates in order to avoid a complete meltdown of the wider economy. My point here is that the rich are now ‘protected’ against serious rate hikes because the government cannot afford to help the poor; the result will be higher than necessary inflation and slower than necessary economic growth. Also, this means that the difference between rich and poor will widen even more. If these arguments are true, the national economy as a whole would be far better off if the difference between rich and poor was not so big. Suddenly there is a fundamental economic, and not just ethical, reason for narrowing the gap between high and low income families.
Fingerbob69 says:
The notes of this MPC meeting are a guide to the outcome of the next …a base rate increase of 0.25% This of course will not curb inflation (the new bette noir) as it is mostly all imported but will stamp on any possible summer bloom of any home grown consumer joie d’vivre. Between this and the next intrest rate hike, 0.25% in September, there’s is going to be a whole load of movement in the markets – most of it down (NAS down to 1050ish) – because of something called Credit Default Swaps ((reported here this week, Asiantimesonline for the last 6 weeks) an unregulated market with an estimated world value of $62 trillion… if just 10% of this goes bad….WOW!). Gold should be the exception. A desire to hold quality should see ”shiney old faithful’ flourish while the errant son-of-a-bitch OIL will stall, inanticipation of a severe readjustment in 2009 ie in the face of a Western recession.
In short… it’s all just a case of History repeating… unfortunately.