3 more years of 0.5% interest rates

Thrugelmir

michaels wrote: »

This forward guiidance malarky seems to be harder than expected, BoE governor says 'I won't raise rates';

Carney has never said that.

Forward guidance outlines the key indicators on which the BOE is basing it's decisions currently. In an attempt to provide certainty. Particularly for business when making investment decisions now.

Graham_Devon

I note in his speech today he announced moves to ease capital controls on banks so that they can lend even more.

Seems to me Carney is living up to everything that was expected from him? Loosen controls, increase lending, keep costs of lending down.

The only problem being that it doesn't appear to be having the desired effect of getting us all borrowing more and more. It certainly doesn't seem the markets believe him, and from the reaction I have seen, Business is somewhat scared of what he's leading us into and the risks being taken with our economy.

A simple example is that the pound reacted the wrong way again and spiked upwards.

Thrugelmir

Graham_Devon wrote: »

I note in his speech today he announced moves to ease capital controls on banks so that they can lend even more.

Stick and carrot approach.

The Bank of England moved to boost the lending capacity of the largest U.K. banks by offering to ease liquidity rules for those that meet capital targets.

wotsthat

Graham_Devon wrote: »

The only problem being that it doesn't appear to be having the desired effect of getting us all borrowing more and more. It certainly doesn't seem the markets believe him, and from the reaction I have seen, Business is somewhat scared of what he's leading us into and the risks being taken with our economy.

Is borrowing more and more really the desired effect?

If you've got a load of money on deposit and you hear the message 'rates will stay low for years' then what would be the sensible response? I'd suggest it would be to seek higher returns by taking more risk.

There's more than a trillion pounds on deposit rates in the UK. If, say, a quarter of that was invested elsewhere there's a chance that this would lead to higher growth and, importantly, the saver rather than the government takes the risk.

Help to buy etc are nice to argue about but, in the grand scheme of things, these schemes are peanuts. How much has been lent in 20% equity loans to date? Nothing. Imagine what £250bn chasing a better return might do - that's the goal especially as, IMO, individuals make better investment decisions than governments.

Graham_Devon

wotsthat wrote: »

Is borrowing more and more really the desired effect?

If you've got a load of money on deposit and you hear the message 'rates will stay low for years' then what would be the sensible response? I'd suggest it would be to seek higher returns by taking more risk.

There's more than a trillion pounds on deposit rates in the UK. If, say, a quarter of that was invested elsewhere there's a chance that this would lead to higher growth and, importantly, the saver rather than the government takes the risk.

Help to buy etc are nice to argue about but, in the grand scheme of things, these schemes are peanuts. How much has been lent in 20% equity loans to date? Nothing. Imagine what £250bn chasing a better return might do - that's the goal especially as, IMO, individuals make better investment decisions than governments.

A trillion pounds gives an average saving per person of 18k each.

Take out kids accounts.

Take out pensioners who will be using the money as a buffer.

How much do you have left?

While some will obviously have more than others, those who already have large amounts on deposit are likely to have invested it anyway. So what are you expecting? Those with say 15-30k to start putting it into high risk investments?

I think you'll find some hesitation.

antrobus

Graham_Devon wrote: »

I note in his speech today he announced moves to ease capital controls on banks so that they can lend even more. ....

He didn't actually. That's just a journalist who doesn't understand banking. What Carney actually said was;

“I can confirm today that, for major banks and building societies meeting the minimum 7% capital threshold, the Bank of England will reduce the level of required liquid asset holdings. The effect will be to lower total required holdings by £90bn, once all eight major banks and building societies meet the capital threshold.”

It's controls on liquidity that are being changed, not capital.

dori2o

ILW wrote: »

So all those indebted mortgage holders are now wishing for unemployment to stay high.

What strange times we live in.

I dont see it like that at all.

The 7% unemployment rate isn't a trigger for definite increases in the base rate, it is merely the point at which the BOE rate setters will consider increasing the rate.

If the unemployment rate falls but the economy is still struggling, wages are still increasing at less than half the rate of inflation, underemployment continues to rise, and there is still no confidence shown in the market, then there is no way rates will increase.

Graham_Devon

chucky wrote: »

That means approximately 3,867 new threads scaremongering interest rates are about to rise that will be created in that time.

Funny you should bring this up actually.

Only we have precisely none of the threads you talk of active on the first page of the forums at this moment in time.

Yet we have no less than four (3 from Hamish + this one) talking of how base rates are going to stay low and even if they do rise, nothing will happen on the first page alone.

You appear to be constructing a very large straw man.

Loughton_Monkey

Graham_Devon wrote: »

.....Only we have precisely none of the threads you talk of active on the first page of the forums at this moment in time.

Exactly. But I estimate there will be about 3,867 of them as we get near to the 3 years.

Graham_Devon wrote: »

.....Yet we have no less than four (3 from Hamish + this one) talking of how base rates are going to stay low and even if they do rise, nothing will happen on the first page alone.

Bit of a rascal, that Hamish.

padington

Still none the wiser if I should fix my mortgage for 5 or 10 years or get the lowest tart rate available. Anyone prepared to answer that in a quick easy to understand, balls on the line, laymen kind of way without answering a question with more questions ?