Sunday, July 10, 2016

Repeat prescription

Bank of England poised to slash interest rates to shore up economy

"The Bank of England is poised to slash interest rates to close to zero this week as fears mount over a Brexit-induced recession. Economists believe the Monetary Policy Committee (MPC) will cut rates to a new low of just 0.25pc on Thursday, while markets have priced in a 75pc chance of more easing." It's a funny old world. Could have sworn Carney was muttering about rate rises if we voted for Brexit.

Posted by quiet guy @ 03:52 AM (7768 views)
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17 thoughts on “Repeat prescription

  • I like how they use the world slash, when rates are already rock bottom with nowhere to go.

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  • Some on this site have been saying for years that IR rises aren’t going to happen in the foreseeable future. Pity we aren’t paid £150k pa for pointing this out.

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  • ‘Slashed’ – more like pushing on a piece of string. Almost feel sorry for Carney. The government won’t do anything meaningful to stimulate the economy, just hopes the central bank does in its syead

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  • Interest rates will remain low until they cannot…..

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  • stillthinking says:

    hmm. How much credibility does the BoE lose if after hitting a 31 year low against the dollar the next move is to cut rates. Nobody will react must be the reasoning.

    What a scam.

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  • I have been wondering, do we really need cut rates, or is this a ruse to create inflation to justify BOE’s jilted view of Britain outside the EU?

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  • I could say interesting times ahead but will settle on uncertain times ahead – Commercial property funds “freezing”, Greek crisis that was never resolved and major Italian Banking problems to name but a few ! Fully echo Pete Green’s comment at 4

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  • @4 The question is how long will they wait to let go and how much damage will they inflict on the economy with low rates? Interesting article on Moneyweek about the unintended consequences of artificialy low interest rates:
    http://moneyweek.com/merryns-blog/low-interest-rates-are-doing-more-harm-than-good-quadruple-them-and-see-what-happens/
    People are saving more, not less, as low rates mean you need a much bigger pot to yield enough income for decades of retirement.

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  • Interest rates will remain low until they cannot…..

    The level of government debt means that IR’s will need to stay low to allow debt management – the key is that Central Bank’s are essentially a government tool to control the debt……

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  • HPW @ 9 the real issue is private and not public debt. But it erst rates will never be raised voluntarily, but when market conditions force them to be raised which will cause calamity

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  • britishblue says:

    There is absolutely no need to slash interest rates. At the level they are it will make no difference to the economy. It is possible just an excuse to lower the pound more as every country around the world is trying to lower their currencies. Brexit is an excuse not a cause for lowering interest rates.

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  • HPW @ 9 the real issue is private and not public debt. But it erst rates will never be raised voluntarily, but when market conditions force them to be raised which will cause calamity

    Governments did take on a lot of private debt in order to reflate the banks – that’s part of the problem. We have seen, and will continue to see, the global CB’s working in Unison to achieve devaluations and low IR’s….until the end of that cartel.

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  • HP – off topic but similar theme (you’ll get my drift)

    Liabilities of defined benefit (DB) schemes have increased markedly according to the Pension Protection Fund’s (PPF) 7800 Index.
    The figures showed total liabilities hit £1,747bn by the end of June. This compares to £1,590.4bn in May.

    The funding ratio of 5,945 schemes also worsened from 81.5% to 78.0% by the end of June.

    SOURCE http://www.professionalpensions.com/professional-pensions/news/2464589/ppf-7800-index-liabilities-to-soar-to-unseen-levels

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  • Market rates are implying reduction to 0.25% today, with a minority seeing deeper cuts.

    Reality is, BOE are freaking out that their project fear has failed and the pound is about to soar. We are in a currency war, fighting over a reducing volume of global trade.

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  • britishblue says:

    14. I tend to agree with you. The European banking system is in deep trouble and people are breaking ranks. The UK really did matter as the largest contributor to NATO, one of the largest contributors to the EU budget, in the top two European export markets for most of the European countries and a good source of income where migrants send money home. Project fear has become project reality. But not for the UK but European countries who see a prize customer and charity giver slipping away. Places like Poland and the Czech Republic see little point in being in an EU is the UK is not there. The fragmentation is starting to happen and will be full throttle before or two years is up

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  • 13. jack c said…Liabilities of defined benefit (DB) schemes have increased markedly according to the Pension Protection Fund’s (PPF) 7800 Index.
    The figures showed total liabilities hit £1,747bn by the end of June. This compares to £1,590.4bn in May.

    Yup – look at any key markets….funny how they just keep on rising, as investors exit.

    15. britishblue said…The fragmentation is starting to happen and will be full throttle before or two years is up

    ”Whatever it takes” – they are going to sacrifice EVERYTHING to keep it going.

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  • Well it may not sound much but its a 50% reduction, this is probably why recently I have seen so many lenders desperate to flog their long low rate interest rate offers as they will be cashing in with a reduction in the rate.

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