Carney guarantees low rates on breakfast tele

chewmylegoff

Fella wrote: »

Ooh I disagree, I think he said plenty. Until today the BOE had a (theoretical) remit based on inflation. Today's announcement basically guarantees that even if inflation went to say 4% or probably higher, there's no possibility of a rise in IRs. His caveats were purely in case of extreme scenarios (runaway inflation or other disasters) IMO. The message was loud & clear: IRs will be kept at 0.5% indefinitely unless something very substantial forces otherwise. A quite different message to the one we've had thus far (albeit in practice quite possibly not very different since the BOE has clearly had no intention of raising IRs regardless of inflation for a long time now).

No he didn't, he gave three scenarios where the guidance on unemployment vs. interest rates could cease to apply, the first of which was if BOE projections suggested CPI was likely to be above 2.5% in 12-24 months time (on a rolling basis) and the second of which was if "medium term" inflation does not appear to be "sufficiently well anchored" (I.e. so woolly as to be meaningless).

Basically he was just signalling that the bank will not raise rates until it has to which is hardly news.

IveSeenTheLight

chewmylegoff wrote: »

Carney pledged to keep interest rates at their current level until unemployment falls below 7%.....of course he caveated this 'promise' by saying that he was good for his word unless he changed his mind and decided that it was appropriate to raise rates even though unemployment was still above 7%. So basically he said nothing.

Give the guy a break !!!!!!.

He's intimated his intention to keep rates low until a certain point unless there are unforseen events.

Bit like me saying to my wife, I'll be home at 18:00, but then if I don't get home till 18:10 because there was an accident, then I'm to be hung, drawn and quartered.

Rates will remain low until unemployment is below 7%.
Of course you would want a reaction if significant events required a change in strategy.

Would you prefer they said nothing at all?

chewmylegoff

I don't really care what he says, I was pointing out that it is in no way a guarantee. As for "unforeseen events" I hardly think CPI projected to be >2.5% constitutes some kind of perfect economic storm scenario.

The reality is that the bank will raise rates when the MPC decides it is appropriate to do so, not when certain arbitrary thresholds on economic indicators (which are inaccurate estimates and subject to govt manipulation) are met.

ruggedtoast

Considering the MPC will do what he tells them, and he will do what the government tells him, I assume we are going to get low rates until at least the next election.

He didnt just decide to announce this, he's been told to. Cameron wants feelgood Britain. The economy is growing again, the banks are lending a little bit, and now homeowners, boomers, and btl scumlords can rejoice.

Ed Millipede and Well Aleck will be consigned to the dustbin of electoral also rans.

wotsthat

Fella wrote: »

Ooh I disagree, I think he said plenty. Until today the BOE had a (theoretical) remit based on inflation. Today's announcement basically guarantees that even if inflation went to say 4% or probably higher, there's no possibility of a rise in IRs. His caveats were purely in case of extreme scenarios (runaway inflation or other disasters) IMO. The message was loud & clear: IRs will be kept at 0.5% indefinitely unless something very substantial forces otherwise. A quite different message to the one we've had thus far (albeit in practice quite possibly not very different since the BOE has clearly had no intention of raising IRs regardless of inflation for a long time now).

He didn't 'basically guarantee' anything - the speech will have been scoured for anything that looked like a promise and removed.

You heard 'loud and clear' that rates will be kept at 0.5% indefinitely barring disaster. He didn't say that or mean that. However, he'll be delighted with the speechwriters if that's the message you heard because you're now more likely to try and find a return on savings in places other than deposit accounts and take more risk in the process. You might even decide to spend a little more what with inflation no longer being a 'concern'.

You're meant to believe that Carney is going to play fast and loose with monetary policy. Don't be fooled.

Graham_Devon

IveSeenTheLight wrote: »

Give the guy a break !!!!!!.

You lurrrrrve him

Rates may stay low until unemployment is below 7%. Your error is assuming they wil when so much was said to cover the issues which may force them to change rates before this point.

Carney himself stated it's not a promise.

purch

Fella wrote: »

Ooh I disagree, I think he said plenty. Until today the BOE had a (theoretical) remit based on inflation. Today's announcement basically guarantees that even if inflation went to say 4% or probably higher, there's no possibility of a rise in IRs.

Mark Carney is the Governor of the Bank of England. He is just one vote on the MPC, there are 8 other members who all have a vote with equal weight.

You would be very silly if you thought this one man has complete control on the direction or level of interest rates, or that any of his utterances are particularly important.

Economic circumstances can change in a very short time, as will the opinions of the the Governor of the BOE.

ruggedtoast

purch wrote: »

Mark Carney is the Governor of the Bank of England. He is just one vote on the MPC, there are 8 other members who all have a vote with equal weight.

You would be very silly if you thought this one man has complete control on the direction or level of interest rates, or that any of his utterances are particularly important.

Economic circumstances can change in a very short time, as will the opinions of the the Governor of the BOE.

The MPC are not independent in any meaningful sense. Interest rates may as well still be set by parliament, at least there would be some democratic process then, rather than just what the incumbent chancellor has decided.

Like The Fed in the US, the BOE is a privately owned bank (we're not allowed to know who owns it) whose main purpose is to ensure the kind of people who own secret private banks remain stinking rich into perpetuity.

As their only customer is the UK government they aren't about to upset it by making errant interest rate decisions.

Generali

ruggedtoast wrote: »

The MPC are not independent in any meaningful sense. Interest rates may as well still be set by parliament, at least there would be some democratic process then, rather than just what the incumbent chancellor has decided.

Like The Fed in the US, the BOE is a privately owned bank (we're not allowed to know who owns it) whose main purpose is to ensure the kind of people who own secret private banks remain stinking rich into perpetuity.

As their only customer is the UK government they aren't about to upset it by making errant interest rate decisions.

That's not true. The Bank of England was Nationalised in 1946 and has a single shareholder: HM Government.

purch

ruggedtoast wrote: »

Like The Fed in the US, the BOE is a privately owned bank (we're not allowed to know who owns it) whose main purpose is to ensure the kind of people who own secret private banks remain stinking rich into perpetuity.

Well I am allowed to know who owns it.

H.M. Government.

You would need to be a complete moron not to know who owns the Bank of England.