Merv outvoted

vivatifosi

I'm surprised nobody has put this up yet, so I will.

Apparently the minutes of the latest MPC show that Merv was voted down in his wish to extend QE:

http://www.bbc.co.uk/news/business-21518538

Minutes of the MPC meeting show it voted 6-3 against expanding the quantitative easing (QE) programme from its current level of £375bn.

However, markets saw the vote as increasing the chance of more QE later.

The pound fell sharply after the release of the minutes....


(long bit in middle)


...Samuel Tombs of Capital Economics said: "February's UK MPC minutes provide another clear demonstration of the committee's increasingly flexible approach to inflation targeting.

"Today's minutes have therefore made us more comfortable with our view that more QE is likely this year, particularly if GDP growth continues to fall short of the committee's expectations."

james_toney

more QE next couple of months

http://www.telegraph.co.uk/finance/economics/9882303/Split-in-MPC-vote-raises-prospect-of-further-monetary-easing.html

IronWolf

lol, I love the phrase 'flexible approach to inflation targeting'

Thrugelmir

Not sure Merv was outvoted. As members of the MPC are independent and can vote as they wish.

Need to read the minutes when published to understand the reasoning behind the majority no vote.

vivatifosi

There's a link to the minutes in the BBC quote Thrug, but I'll put a direct link in here for good measure:

http://www.bankofengland.co.uk/publications/minutes/Pages/mpc/pdf/2013/mpc1302.aspx

Harry_Boyle

From the minutes:

"The Governor invited the Committee to vote on the propositions that:

Bank Rate should be maintained at 0.5%;

The Bank of England should maintain the stock of asset purchases financed by the issuance of central bank reserves at £375 billion.

Regarding Bank Rate, the Committee voted unanimously in favour of the proposition."

Good to see that there are no longer any dissenters in the ranks now we have got rid of that discredited crackpot Andrew Sentance. We can all look forward to a sustained period of low rates in order to rebalance the economy and more importantly pay down our large mortgages to more acceptable levels, ready for when rates finally do rise in 5 years time.

Fella

Harry_Boyle wrote: »

We can all look forward to a sustained period of low rates in order to rebalance the economy and more importantly pay down our large mortgages to more acceptable levels, ready for when rates finally do rise in 5 years time.

Well not quite all. A few million pensioners hoping to live off their savings are getting viciously shafted.

A nice triple-whammy of 0.5% IRs, QE & funding for lending is depreciating the value of savings at an eye-watering rate. Bad news for everyone who was prudent & saved. Excellent news for everyone who took out a mortgage they couldn't afford.

Who's to say that rates will rise in 5 years either. Could be next year, could be in 10 years. The hugely incompetent Mervyn King has no more idea than the rest of us (i.e. none at all) exactly what inflationary effect QE will have down the line. That's not stopped him using lashings of it though. Nice of him to gamble with everyone's welfare like that. The sooner the cretin is out of office the better.

Harry_Boyle

Fella wrote: »

Well not quite all. A few million pensioners hoping to live off their savings are getting viciously shafted.

More fool them for keeping their savings in cash - an investment strategy 100% guaranteed to be eroded by inflation.

However, I doubt the figure is 'millions', it'll just be a few thousand folk who decided not to invest in traditional pensions (and therefore have a guaranteed annuity) because they didn't want to 'lose control' of their money or because they didn't trust the government/pensions industry.

Not such a great decision after all - though they were right not to trust the government, just wrong in holding their wealth in cash.

Fella wrote: »

A nice triple-whammy of 0.5% IRs, QE & funding for lending is depreciating the value of savings at an eye-watering rate. Bad news for everyone who was prudent & saved. Excellent news for everyone who took out a mortgage they couldn't afford.

Well, they could just change their investment strategy to take advantage of the current financial climate - just as I did by buying a dream home in 2010. There are two sorts of people in this world; those who adapt to their environment and those who expect the environment to adapt to them. Nature tells us which type flourishes and which doesn't.

Graham_Devon

Harry_Boyle wrote: »

Well, they could just change their investment strategy to take advantage of the current financial climate - just as I did by buying a dream home in 2010. There are two sorts of people in this world; those who adapt to their environment and those who expect the environment to adapt to them. Nature tells us which type flourishes and which doesn't.

Yer, cus that would work for pensioners. :undecided

Fella

Harry_Boyle wrote: »

More fool them for keeping their savings in cash - an investment strategy 100% guaranteed to be eroded by inflation.....

.....Well, they could just change their investment strategy to take advantage of the current financial climate

Massively glib advice to dish out to pensioners. Many of them are bemused by simple savings let alone anything more sophisticated. Besides which a move into more cash-based assets is generally considered sensible as people are past retirement age anyway.

andyroberts1967

Personally I'm in the same boat as Harry Boyle, not a massive mortgage, about £80k left on a house currently valued at £200k. About 3 years ago we shortened our mortgage from 20 years to 13, plus we overpay nearly £200/month, so I reckon our mortgage will be paid off in 9 years (2022). If 5 years of that is ultra-low interest rates then you won't find me arguing. I'm on a Woolwich lifetime tracker for what it's worth, 2.27% over base.
Any money I save after the mortgage is finished (I'll be early 50s then), I'll be putting into a top-up pension fund (I have a civil service pension), but I won't be stockpiling cash, that's for sure!