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BoE Poll

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  • wisbech_lad
    wisbech_lad Posts: 295 Forumite
    No Change
    I think they will hold this round. There are signs that discretionary demand is weakening (e.g. Ryanair warning) so they will want to wait and see.

    Inflation is starting up in China, IMHO (I live and work in HK). Couple that with continued high commodity prices (my FIL’s coffee plantation is happy about this though) I don’t see current CPI/RPI levels as a blip. So rates will continue to rise.

    For what its worth I think we will see a good old fashioned pre WW1 style credit panic/ crash at some point soon – e.g. that IR do not need to be high to cause real pain. For example the 1907 panic was caused by overnight rates of 7%!

    We’re spending a lot of “insurance” money on – presently unneeded – guaranteed lines of credit. Crazy when “no-covenant” loans are all the rage, but if there is one thing about a credit crunch – it is that credit just isn’t available. I’ve seen it in markets before, and it is scary.
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    No Change
    wisbech_lad wrote: »
    I think they will hold this round. There are signs that discretionary demand is weakening (e.g. Ryanair warning) so they will want to wait and see.

    Inflation is starting up in China, IMHO (I live and work in HK). Couple that with continued high commodity prices (my FIL’s coffee plantation is happy about this though) I don’t see current CPI/RPI levels as a blip. So rates will continue to rise.

    And the UK will start to import this inflation as soon as the £ starts to drop. The BoE desperately needs to keep the £ high, that's the real tightrope walk they're performing at the moment IMO.
    wisbech_lad wrote: »
    For what its worth I think we will see a good old fashioned pre WW1 style credit panic/ crash at some point soon – e.g. that IR do not need to be high to cause real pain. For example the 1907 panic was caused by overnight rates of 7%!.

    Wasn't that at a time when, due to the Gold Standard, inflation was just about nil and normal normal interest rates were 2-4%? For example, the US govt issued bonds at 4% in 1907. 7% interest rates would be high in real terms and much higher than the mkt would be expecting.
    wisbech_lad wrote: »
    We’re spending a lot of “insurance” money on – presently unneeded – guaranteed lines of credit. Crazy when “no-covenant” loans are all the rage, but if there is one thing about a credit crunch – it is that credit just isn’t available. I’ve seen it in markets before, and it is scary.

    I've been reading a bit about no covenant loans - a definite symptom of a credit bubble.
  • mystic_trev
    mystic_trev Posts: 5,434 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    +25bp
    5 year swap rates now over 6%
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    No Change
    mystic_trev wrote: »
    5 year swap rates now over 6%

    And Big Bank still reckon no change before end 2008. Somebody's going to be wrong and it's more likely to be Big Bank than the market.
  • Melissa177
    Melissa177 Posts: 1,727 Forumite
    No Change
    Okay, well City Trader loved the fact I wanted to talk shop with him. His view was that there wouldn't be another rise until August, when the inflation report comes out (as I think I said yesterday). He thought interest rates, for economic reasons, should probably be at 6.5%, but because he's a gambler rather than an economist, his money is it being at 5.75% by the end of the year, even though the market is pricing in 6%. He trades on his own account a lot, but says that there is no value in the Betfair rates at the moment because everyone's predicting the same thing. He said the market is pricing in "5 1/4 basis points for no change", which the same as a 1.21 return on Betfair (about where it is at the moment). Whew!

    He also pointed out that Tim Congdon's comments were quite possibly correct - that interest rates DO need to go to 7-8% in order to cool inflation, but that he doesn't think that will happen in the foreseeable future because the BoE aren't going to be that bold.

    He has very kindly invited me around to his Docklands penthouse this weekend to show me all his Bloomberg/trading tools etc, although I suspect he has an ulterior motive... Looks like Mr. B isn't the only member of the Melissa177 fan club!
    Errors of opinion may be tolerated where reason is left free to combat it. - Jefferson
  • Guy_Montag
    Guy_Montag Posts: 2,291 Forumite
    1,000 Posts Combo Breaker
    No Change
    Melissa177 wrote: »
    Okay, well City Trader loved the fact I wanted to talk shop with him. His view was that there wouldn't be another rise until August, when the inflation report comes out (as I think I said yesterday). He thought interest rates, for economic reasons, should probably be at 6.5%, but because he's a gambler rather than an economist, his money is it being at 5.75% by the end of the year, even though the market is pricing in 6%. He trades on his own account a lot, but says that there is no value in the Betfair rates at the moment because everyone's predicting the same thing. He said the market is pricing in "5 1/4 basis points for no change", which the same as a 1.21 return on Betfair (about where it is at the moment). Whew!

    He also pointed out that Tim Congdon's comments were quite possibly correct - that interest rates DO need to go to 7-8% in order to cool inflation, but that he doesn't think that will happen in the foreseeable future because the BoE aren't going to be that bold.

    He has very kindly invited me around to his Docklands penthouse this weekend to show me all his Bloomberg/trading tools etc, although I suspect he has an ulterior motive... Looks like Mr. B isn't the only member of the Melissa177 fan club!
    Is it his own penthouse, or does he rent it?

    Good pull by the way :T

    has he got a sister?;)
    "Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
    Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
    "I think I'll become an alcoholic," said Betty.
  • dreamalittle
    dreamalittle Posts: 203 Forumite
    +25bp
    Melissa177 wrote: »
    to show me all his Bloomberg/trading tools

    Well, I've never heard it called that before!
  • Melissa177
    Melissa177 Posts: 1,727 Forumite
    No Change
    Guy_Montag wrote: »
    Is it his own penthouse, or does he rent it?

    Good pull by the way :T

    has he got a sister?;)


    He rents it - he's bearish about the UK property market at the moment (he's Canadian). He's also younger than me by about 4 months :eek: and an only child, so no sister, sorry!

    He was complaining about his IT/systems people last night, so I hope he doesn't work for the same Big Bank as Generali is at! :rotfl:
    Errors of opinion may be tolerated where reason is left free to combat it. - Jefferson
  • Melissa177
    Melissa177 Posts: 1,727 Forumite
    No Change
    dreamalittle wrote: »
    Well, I've never heard it called that before!

    :rotfl: :rotfl: :rotfl:
    Errors of opinion may be tolerated where reason is left free to combat it. - Jefferson
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    No Change
    Melissa177 wrote: »
    He was complaining about his IT/systems people last night, so I hope he doesn't work for the same Big Bank as Generali is at! :rotfl:

    I don't get complaints, only thanks. He can't work for Big Bank.

    He could well work for mid-sized foreign bank where I was a few years back - their IT was terrible. They cancelled 2 London IT projects, writing off a total of £160 million! They only had a thousand employees in London - they should have just upped the bonuses by £160k each!
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