My first thread in this sub forum will be the defining moment for a generation

padington

The central bankers usually do the opposite of what they say it seems to me. They talk about interest rates going up, the market responds, that response means they don't have to go up, so they don't.

The time threads like this aren't made after each muttering is probably when interest rates will go up.

Generali

chucknorris wrote: »

As Gen said above Carney hasn't really said anything that we didn't already 'know' (expect), rates might go up a little earlier than expected, but even so they would have been rock bottom for almost 7 years. Possibly even better than that, is that the long term base rate new 'norm' might be sub 3%. Again, that was already an expectation, but reinforcing that notion spells out that overall that this is good news, not bad. I think Carney is simply trying to head off any unnecessary concerns about the inevitable, by getting us used to the idea, it is certainly getting enough coverage in the news.

He's trying to avoid a 'Taper Tantrum', when the US bond market got quite volatile when it became clear that they were actually ending QE, perhaps.

Landofwood

It looks like in the past fixed mortgage rates have been around 0.5-3.0% above base rate. If rates rise to 2% in 3 years time I would still expect to see very competitive fixed rate mortgages available, probably similar to what we have available to us today.

mwpt

As a tangental topic, does the central bank have total control over rates? I mean, what happens if the market decides the UK is very risky after all (hypothetically) and demands 8% yields from our bonds? What is the outcome of that for the BoE, banks, mortgages, etc?

lisyloo

Carney strongly indicated around this time last year that rates would rise in September 2014.

Agree, that it's not an exact science, but the oil price factor in the inflation calculations is quite forseeable.
This is surely about setting expectations.

purch

ggb1979 wrote: »

Or at least make savers happy and some mortgage payers a bit less wealthy.

I think you might be getting a little over excited by what is likely to be a non-event.

The Bank will not be able to do anything if the Fed doesn't, and if the rest of the World is still loosening policy (Europe, China etc)

Generali

mwpt wrote: »

As a tangental topic, does the central bank have total control over rates? I mean, what happens if the market decides the UK is very risky after all (hypothetically) and demands 8% yields from our bonds? What is the outcome of that for the BoE, banks, mortgages, etc?

The Bank of England can do more QE: print money, buy up Sterling denominated debt and force up the price and thus force down the interest rate.

Because the UK has a pretty decent record of repaying debt she gets to borrow in Sterling. As a result, there is never a reason to default on UK debt.

As Argentina, for example, has a lousy debt record so has to borrow in foreign currency and so can't print money and inflate away the debt.

mwpt

Generali wrote: »

The Bank of England can do more QE: print money, buy up Sterling denominated debt and force up the price and thus force down the interest rate.

With a resulting devaluation of the currency? In theory they could do this endlessly, but in practice how far could they take it?

Generali

mwpt wrote: »

With a resulting devaluation of the currency? In theory they could do this endlessly, but in practice how far could they take it?

They could do it until people refused to lend in Sterling any more. There's no real way to say how long that would take and that sort of thing tends to happen very fast. One day you can borrow money and the next you can't, at least not at sensible interest dates at least.

Ronaldo_Mconaldo

Here is a link to Janet Yellen saying that interest rates are likely to rise in the US this year:

http://www.bbc.co.uk/news/business-33537446