When will the BOE first raise base rate?

wotsthat

Generali wrote: »

It's a good point. When does a rise become meaningful? At 1% or 2%. What about 4%? These are all still historic lows for interest rates. A base rate of 4-5% should be seen as normal if inflation targeting works being inflation plus 1-2%.

0.25% is meaningful but what impact will it have - seems to be largely symbolic given the current low inflation rate.

I'm not sure there's really a normal. During my lifetime rates have either been going up or down. Clearly current rates are at historical lows but the lack of change for so long is abnormal too.

Graham_Devon

September

I've been listening to some "economists" on the news. A lot of them seem to feel that now the word has been given, things will move pretty quickly. Quite a few of them feel around 3 months, so I have gone for Sepetember on that basis. They all seem to point out that over the past few months Carney has done all he can to state rates won't rise for some time. So the change, again, in sentiment is quite significant.

Me myself, I have no idea. So mine is purely a guess, based on what others have suggested.

Generali

Graham_Devon wrote: »

I've been listening to some "economists" on the news. A lot of them seem to feel that now the word has been given, things will move pretty quickly. Quite a few of them feel around 3 months, so I have gone for Sepetember on that basis.

Me myself, I have no idea. So mine is purely a guess, based on what others have suggested.

My belief, which everyone can take or leave, is that once rates start to rise they will rise higher and faster than most expect.

I think most people think that base rates will max out at 2-3%, something like that. Well 5% is the historical average and I reckon if you reckon the price of something won't revert to the mean then you need to have a bloody good reason. I'm yet to see one.

Graham_Devon

September

Generali wrote: »

My belief, which everyone can take or leave, is that once rates start to rise they will rise higher and faster than most expect.

I think most people think that base rates will max out at 2-3%, something like that. Well 5% is the historical average and I reckon if you reckon the price of something won't revert to the mean then you need to have a bloody good reason. I'm yet to see one.

I'd agree, Carney was clear in his statement that it's the path of interest rates after the initial rise that is the important thing. His statement seems to contain something of a warning....and some others have taken the same thing from that.

Article here backing up your view.
http://www.telegraph.co.uk/finance/economics/10897820/UK-interest-rates-to-rise-this-year-and-could-peak-at-5pc.html

mayonnaise

January 2015.

No need to rush anything. We don't have rampant inflation nor significant wage inflation, economy is doing well but still a long way to go, no housing boom except in some areas in London and the SE....

Some on here seem to think that interest rates are set for the sole purpose of influencing the housing market.

padington

General election is on may 2015. Probably one rate rise before sold as proof the economy is back on track and that Britain is on the mend. Probably timed with good economic news more than anything else.

wymondham

Late May 2015!

shortchanged_2

October

Not sure they'll be in a hurry with the way things are going in Europe.

With inflation remaining quite low the biggest concern for the BoE I can only imagine is the housing market and the threat that is posing to a genuine production driven recovery.

The BoE may well bring in a small rise in the next few months just to keep people on their toes as to avoid complacency. A recovery fueled with too much debt is not a good thing.

Generali

shortchanged wrote: »

Not sure they'll be in a hurry with the way things are going in Europe.

With inflation remaining quite low the biggest concern for the BoE I can only imagine is the housing market and the threat that is posing to a genuine production driven recovery.

The BoE may well bring in a small rise in the next few months just to keep people on their toes as to avoid complacency. A recovery fueled with too much debt is not a good thing.

The big concern that nobody mentions is the carry trade and the nightmare it would cause the world's economy if the US was to be the recipient of funds.

That's why if the Fed raises rates the UK will have to do so too.

The Eurozone could cope with being on the short side of a carry trade with the US. The UK could not.

Masomnia

Am I right in saying that they base their decisions on forecasts for around 6 months ahead?

Mid-2015 will there still be strong economic growth, wages outpacing inflation by a greater margin and that feeding through to prices? I wouldn't be surprised. With that in mind I certainly wouldn't rule out a small rise by the end of the year.

Will the relative value of the pound have any bearing on their decision I wonder? The EU loosening policy means a stronger pound anyway, a rate rise will surely put even more upward pressure on it and they might not want that.