Sunday, Aug 16, 2015

'Solid recovery' means interest rates WILL rise

Telegraph: Interest rates must rise sooner rather than later

The Bank of England could damage Britain's recovery if officials wait too long before starting to raise interest rates, one of its policymakers has warned.

Posted by hpwatcher @ 09:38 PM (7500 views)
Add Comment
Report Article

21 Comments

1. libertas said...

So, one adviser calls for rate rises, but we all know that we need a few insiders agreeing before it becomes even remotely likely.

Sunday, August 16, 2015 10:19PM Report Comment
 

2. hpwatcher said...

I do *LOVE* all the propaganda coming out of Threadneedle Street.

Monday, August 17, 2015 07:43AM Report Comment
 

3. reticent said...

It was one last month. This month it'll obviously be at least two.

Last time, the raise vote peaked at two, IIRC. This time it will probably hit 3, maybe 4, maybe even...

She's right, though. Monetary policy has an outside lag of 1-2 years. If they think inflation will have longsince returned by then month, they should raise now, as far as the textbooks are concerned.

Monday, August 17, 2015 07:57AM Report Comment
 

4. reticent said...

But yeah, hpc, I agree that all these announcements are stage-managed. I can't imagine they're free to talk to the press unprompted. I imagine even the vote is rigged so as to manage expectations, ie they have broad consensus on when to raise but ask the hawks to call for it earlier so the public sees it coming.

Monday, August 17, 2015 08:01AM Report Comment
 

5. hpwatcher said...

She's right, though. Monetary policy has an outside lag of 1-2 years. If they think inflation will have long since returned by then month, they should raise now, as far as the textbooks are concerned.

Well, BoE have shown they they can be most comfortable with rates at around 5%, so why bother now?

Sterling is quite strong - with inflation at 0% - so why raise interest rates on the basis of some prediction that might never happen. Added to the mix that the [non-existent] wage growth and rising unemployment.........just talk and nothing else.

Monday, August 17, 2015 08:05AM Report Comment
 

6. icarus said...

"it would be a "mistake" to leave it too long to raise interest rates". True. By definition. This just about sums up all these pronouncements.

And leaving it too long would "create distortions". We wouldn't want that. Would we?

Monday, August 17, 2015 08:41AM Report Comment
 

7. reticent said...

@5 I know that's why I spoke about it peaking at 3-4 votes calling for a raise.

If no one was voting for a raise, it wouldn't add much credibility to their claims that the recovery is, for the most part, entrenched.

By the time it gets to 4 people calling for it, the Brexit threat will be looming larger, which will probably bear down on sterling, but create an environment of uncertainty that will probably see them hold off on raising rates. But wages are up. They're claiming productivity has finally started increasing (you would expect the increase in sunday trading to dent that, however). They might want to squeeze a rate rise in before everyone starts talking Brexit.

They do obviously, honestly intend to raise rates at some point.

Monday, August 17, 2015 08:55AM Report Comment
 

8. hpwatcher said...

They do obviously, honestly intend to raise rates at some point.

After 7 years, you would expect so, but I'm still not convinced.

Monday, August 17, 2015 09:12AM Report Comment
 

9. reticent said...

@8 Are you seriously contending that the MPC has some clandestine plan to keep rates low forever and keep the charade of imminent rate rises going indefinitely?

Monday, August 17, 2015 10:08AM Report Comment
 

10. hpwatcher said...

@8 Are you seriously contending that the MPC has some clandestine plan to keep rates low forever and keep the charade of imminent rate rises going indefinitely?

I'm not sure the MPC can increase interest rates. Their hands are pretty much tied. As much as I disagree with it, I think this charade can go on a lot longer.

Monday, August 17, 2015 02:30PM Report Comment
 

11. clockslinger said...

But it was no-flation in the last article on this site and pubic hair was fashionable last week in the last Telegraph lifestyle pages. This article it's interest rate rises week and I see waxing is back. I clearly need help to keep up.

Monday, August 17, 2015 06:33PM Report Comment
 

12. libertas said...

Inflation figures are out tomorrow. Should see pay to this, and oil prices will feed through to produce deflation between now and Christmas all things equal.

Frankly, the economy risks sunburn if rates remain positive for too long. If deflation sets in and Sterling keeps rising, exports Will begin to complain and it will keep sucking in capital and people from Europe. They all want to earn Sterling. Will more so if sterling hits €2.

Monday, August 17, 2015 06:48PM Report Comment
 

13. mister ed said...

@12
You should apply for a job on The Economist.

They like a little injection of humour every now and again.

"exports Will begin to complain"

I liked that bit.

Monday, August 17, 2015 07:01PM Report Comment
 

14. khards said...

You guys should watch this:

Monday, August 17, 2015 08:01PM Report Comment
 

15. Canbuywontbuy said...

Pretending it's an option, and actually doing it are two different things.

Tuesday, August 18, 2015 07:27AM Report Comment
 

16. i remember the 90`s said...

@14 it was a good listen although it went over my head at times ,my concern is to get house prices to crash if looks like everything else is going to crash as well .

Tuesday, August 18, 2015 08:07AM Report Comment
 

17. jack c said...

@ i remember the 90`s - please try 60 second round up below


www.asset.tv/video/schroders-60-seconds-craig-botham-case-second-great-depression

Tuesday, August 18, 2015 08:52AM Report Comment
 

18. reticent said...

Only made it through 3 mins of Steve Keen. I'll try and watch it later.

Here is Jack C's video without having to create a login:

https://www.youtube.com/watch?v=P1Gg1eajqz4

Not sure how related they are to be honest, but the Schroders one is interesting nonetheless. It's a pity he doesn't draw parallels with the first great depression except to mention that they exist at the very beginning. He doesn't even say that the stock market is seen by many as massively overvalued, which was surely what caused the great Wall st crash.

Tuesday, August 18, 2015 09:45AM Report Comment
 

19. icarus said...

Recent IR cuts in Australia, Canada, India, Jamaica even......

Tuesday, August 18, 2015 01:58PM Report Comment
 

20. jack c said...

Ghana up 1% to 22% - better return than an Enfield Semi (currency hedge included) !

Tuesday, August 18, 2015 02:11PM Report Comment
 

21. hpwatcher said...

The model presented in the video is particularly interesting. Debt goes up, all else down. Pretty much where we are.

Tuesday, August 18, 2015 09:16PM Report Comment
 

Add comment

  • If you do not have an admin password leave the password field blank.
  • If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines
Username  
Admin Password
Email Address
Comments

Main Blog | Archive | Add Article | Blog Policies