Tuesday, November 25, 2008

King: Expect bigger rate cuts

Stg hits session lows vs dlr; King hints at big rate cuts

Sterling fell to a session low versus the dollar on Tuesday after Bank of England Governor Mervyn King said the bank may need to cut rates by more than they would otherwise as banks are slow to pass cuts on.

Posted by 51ck-6-51x @ 11:12 AM (1216 views)
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11 thoughts on “King: Expect bigger rate cuts

  • planning4acrash says:

    Yup, gold fell back a bit against the dollar, from an intraday high of $830, down to its current $806, but sterling remained slightly more stable against gold, falling back from £549 to £535. They just keep testing new highs.

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  • My admiration for Mr King has fallen to unprecedented lows this morning

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  • I have a high regard for King. His goal was monetary stability and he pursued that to the end. Although it seems perverse, I think that holding interest rates high might have been more successful than the meaningless measure of artificially lowering them.
    Controlling prices doesn’t work. Forcibly reducing the price of bread means no bread. Forcibly reducing the cost of borrowing means no borrowing.

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  • But you have already made big cuts, Mr King.

    If you go any further you will find your lever is not connected to anything at all ! At this point, you lose control.

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  • eyeoftheweasel says:

    What you’re saying sounds reasonable to me Stillthinking. It’s just basic supply and demand – if the price of credit is held down, then the banks will be less inclined to supply as much.

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  • How can banks lend more ? They are already stretched beyond belief. As Vince Cable put it last night. Lest’s put things in perspective. When Barclays balance sheet is twice as big as the GDP output, how can ask it to commit to more lending ?

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  • Can anyone explain to me why the US can drop interest rates to 1%, pump trillions and trillions of dollars into their economy and the dollar still remains strong??

    Mervyn King so much as farts a sound that mildly resembles “cuuuuuuut” and the @rse falls out of Sterling.

    I know it should be the least of my worries but my upcoming trip to Canada is getting more and more expensive by the week and its pi$$ing me off!

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  • whostolemyendowment says:

    Well reasoned HB…..I have the came headache inducing query…..why the feck is the $ so strong? This makes no sense, unless it is being proped up by the likes of China together with Middle East oil exporters…because the USA is to big to fail. If Obama doesn’t play ball come 2009 – they will drop the $ fast…

    Unfortunately sterling is caught between the $ and the € so is the easy target of currency and futures traders…

    If I am wrong please someone correct me….thanks.

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  • hash browne – because the $ is still the standard reserve currency, and for that to change will take so long* that positions could be closed out in time to limit any losses.
    * because the countries with these reserves would not want to go into a fire sale scenario.
    (Furthermore I think china is willing to keep subsidising the U.S. consumer until they are owned.)

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  • WSME:
    timely agreement
    :o)

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  • Because China have trillions of them and they have an agreement with the US not to fu*k each other over

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