BOE to hold firm on low interest rates

HAMISH_MCTAVISH

Graham_Devon wrote: »

Central banks may be powerful, but you confuse banks with bank.

The BOE sets UK monetary policy.

If Gilt yields rise, they can resume asset purchases via QE to drive them down.

If the price of wholesale money rises, they can continue or increase the FFL programme to provide cheap funding for lending to UK banks.

They also cannot be forced to raise the base rate, and will not do so until unemployment has fallen markedly and the economy reaches "escape velocity".

I don't 'confuse banks with bank'......

I know exactly who is in control of UK monetary policy and the options they have available to make sure it stays that way. :cool:

OffGridLiving

chucky wrote: »

All pretty obviously really.

I've never understood why so many threads gets started by the usual suspects about rates going up trying to scare and mis-inform people.

With so few people coming in here, I doubt that their attempts to scaremonger are very successfull. Fram what I've read, most home owners in here are enjoying the low rates and either investing their mortgage savings or making overpayments.

While the doomsters might think people are quaking in our boots and fretting about a rate rise, they're not. They're too busy concentrating on making hay while the sun shines.

CLAPTON

HAMISH_MCTAVISH wrote: »

The BOE sets UK monetary policy.

If Gilt yields rise, they can resume asset purchases via QE to drive them down.

If the price of wholesale money rises, they can continue or increase the FFL programme to provide cheap funding for lending to UK banks.

They also cannot be forced to raise the base rate, and will not do so until unemployment has fallen markedly and the economy reaches "escape velocity".

I don't 'confuse banks with bank'......

I know exactly who is in control of UK monetary policy and the options they have available to make sure it stays that way. :cool:

yes except to the extent that foreign dealers drive the pound down and foreign debt begins to get expensive

michaels

HAMISH_MCTAVISH wrote: »

The BOE sets UK monetary policy.

If Gilt yields rise, they can resume asset purchases via QE to drive them down.

If the price of wholesale money rises, they can continue or increase the FFL programme to provide cheap funding for lending to UK banks.

They also cannot be forced to raise the base rate, and will not do so until unemployment has fallen markedly and the economy reaches "escape velocity".

I don't 'confuse banks with bank'......

I know exactly who is in control of UK monetary policy and the options they have available to make sure it stays that way. :cool:

All true except that 'print' enough pounds and foreigners won't want them, the exchange rate will fall and inflation will rise which as stated by Carney would be a trigger for higher interest rates without the unemployment 'rule' having been met.

ILW

I thought Carney only had one vote on IRs. King got outvoted quite a lot.

lvader

michaels wrote: »

All true except that 'print' enough pounds and foreigners won't want them, the exchange rate will fall and inflation will rise which as stated by Carney would be a trigger for higher interest rates without the unemployment 'rule' having been met.

People keep saying this and it sort of makes sense but in reality the evidence suggests otherwise. The big drop in the pound in the hight of the crisis was long before QE was first introduced. The pound strengthened after QE.

CLAPTON

lvader wrote: »

People keep saying this and it sort of makes sense but in reality the evidence suggests otherwise. The big drop in the pound in the hight of the crisis was long before QE was first introduced. The pound strengthened after QE.

which evidence is this?


the evidence of history that shows that printing money always leads in inflation and that printing a lot leads to a lot of inflation

or the evidence of the last few very very odd years?


we won't really know until the economy starts to really grow and there starts to be home grown inflation pressure (fall in unemployment and wage pressures)

lvader

QE isn't the same as simply printing more money.

Growth by it's very nature means growth after inflation, that would most likely lead to a stronger currency.

CLAPTON

lvader wrote: »

QE isn't the same as simply printing more money.

The purpose of QE is to expand the money supply.

lvader

CLAPTON wrote: »

The purpose of QE is to expand the money supply.

But it hasn't though has it, money supply has declined.