BOE MPC voted 6-3 to hold rates in Feb

IveSeenTheLight

Generali wrote: »

From the horse's mouth:

Remember, there is nothing that says that base rates have to change by 0.25% (25 basis points) each time. If interest rates rise they may well rise faster and higher than many expect.

In your considered opinion, what rise would you expect to see?

With rates being help for so long, the countries debt and the MPC vote slowly changing towards a rate change, I cannot see past an initial 0.25% rise when the time comes.

What will be interesting is when it happens.
Will it be this year or will they be able to hold off until next year when the effect of the VAT increase drops out.

Heyman_2

ILW wrote: »

All this fuss about base rate may rise to 1%.
1% !!!!!!!!!!

It's a serious matter, it'll put my mortgage rate up to 1.79% and be a whopping £45 extra a month :eek: :eek: :eek:

ILW

There was an American central banker of some sort on the radio the other day saying that in the US markets, many had lost confidence in the BoE due to their inability to control inflation.

ILW

Heyman wrote: »

It's a serious matter, it'll put my mortgage rate up to 1.79% and be a whopping £45 extra a month :eek: :eek: :eek:

What will you have to give up?

Radiantsoul

ILW wrote: »

There was an American central banker of some sort on the radio the other day saying that in the US markets, many had lost confidence in the BoE due to their inability to control inflation.

There is not really enough details to say whether that statement matters

Was it on Radio Norwich? Was the man being quoted a junior clerk at the central bank or the head? Are the many how have lost confidence merely cleaners and shoeshine boys?

RenovationMan

It all looks on course for a 0.25% rate rise in May/June which is pretty much what pundits have been speculating on for months now (including myself).

However, once all of the tax measures are in place (remember that many households will lose child benefits, etc in a couple of years), we will be running the risk of deflation

Radiantsoul

I reckon a rise is likely is the next six months or so. But I can't see it being more than 0.25%. I can't see any real risk of runaway inflation, and so a delay in raising rates is not too bad. A premature increase seems far more damaging as it would probably dent business confidence and would be hard to reverse.

Generali

IveSeenTheLight wrote: »

In your considered opinion, what rise would you expect to see?

With rates being help for so long, the countries debt and the MPC vote slowly changing towards a rate change, I cannot see past an initial 0.25% rise when the time comes.

What will be interesting is when it happens.
Will it be this year or will they be able to hold off until next year when the effect of the VAT increase drops out.

TBH I have no idea. Deflation is still a risk as ex-tax inflation is low and the money supply continues to flat-line or even fall.

At present, the only big risk to inflation I can see would be an oil price shock. Something like a revolution in Saudi cutting off supplies and increasing oil a long way above what is being talked about now, putting $150 bbl in the shade.

The only other way inflation really takes hold without massive money supply increases (ms is falling) is wages going up and there is no sign of that right now.

ILW

Radiantsoul wrote: »

There is not really enough details to say whether that statement matters

Was it on Radio Norwich? Was the man being quoted a junior clerk at the central bank or the head? Are the many how have lost confidence merely cleaners and shoeshine boys?

It was R4 but I have no idea who the person was, so could be the cleaner.

ILW

Generali wrote: »

TBH I have no idea. Deflation is still a risk as ex-tax inflation is low and the money supply continues to flat-line or even fall.

At present, the only big risk to inflation I can see would be an oil price shock. Something like a revolution in Saudi cutting off supplies and increasing oil a long way above what is being talked about now, putting $150 bbl in the shade.

The only other way inflation really takes hold without massive money supply increases (ms is falling) is wages going up and there is no sign of that right now.

Some of the unions are beginning to flex their muscles using "inflation at 4-5%" as a reason to push for higher settlements. It only takes a couple of the larger employers to cave in and a very nasty spiral can ensue.