Fed Hike

Generali

vivatifosi wrote: »

Quite surprised at the ramping up. I thought it would be more gradual than that. Interesting, thanks Gen.

I keep saying that rates are going to increase faster and higher than many people think.

The reason? The people that set interest rates keep telling us that.

People can keep betting that the Fed/BoE aren't going to do what they say but I don't think that there's anything contentious about increasing rates to 4% in 3 years. Anyone that thinks that it is needs to think about what has changed because they are making a 'this time it's different ' argument which usually ends expensively.

Thrugelmir

Generali wrote: »

Anyone that thinks that it is needs to think about what has changed because they are making a 'this time it's different ' argument which usually ends expensively.

Rates need to normalise otherwise there'll be no ammo for the next downturn (whenever that might be).

Generali

Thrugelmir wrote: »

Rates need to normalise otherwise there'll be no ammo for the next downturn (whenever that might be).

Rates need to normalize to control inflation and so the economy can go back to working on a normal footing. Who is going to lend money at current rates? Us savers must be nuts: until recently we've been paying people to borrow from us. You can't run an economy on that basis.

michaels

Generali wrote: »

Rates need to normalize to control inflation and so the economy can go back to working on a normal footing. Who is going to lend money at current rates? Us savers must be nuts: until recently we've been paying people to borrow from us. You can't run an economy on that basis.

I would disagree and say demographics and Japan. If more of the population wish to save than borrow and invest then why shouldn't people have to pay to defer consumption?

Can anyone explain how the fed 'range' works? Could zero to 0.25 and 0.25 to 0.5 both mean effectively 0.25% or alternatively does it mean an increase from zero to 0.5%?

chucknorris

Crashy_Time wrote: »

My bet is that you are running around trying to sell property right now. Was property seen as more attractive than the stock market 25 years ago, I can`t remember? I do remember having unit trusts that did well in the late 80`s, before Japan popped.

As I said to you on the other thread crashy, if I sold now, I would have to pay £330k CGT and also redeem my very low margin tracker mortgages, they are worth over £28k per annum to me (compared to the 2007 base rate). The thing about the stock market crashy is that 25 years ago I wouldn't have been able to invest that much in it, but people like you bought the houses for me, once again thank you, now that I have the (notional) equity, I am happy to invest it elsewhere (when the time is right).

mystic_trev

Crashy_Time wrote: »

Was property seen as more attractive than the stock market 25 years ago, I can`t remember?

Dunno. Ask your Landlord, that's when you started paying his Mortgage off.

mystic_trev

Generali wrote: »

I keep saying that rates are going to increase faster and higher than many people think.

Gen. Have you any idea when we're going to start raising ours in the UK.

chucknorris

mystic_trev wrote: »

Gen. Have you any idea when we're going to start raising ours in the UK.

He predicted on another thread in the new year, so quite soon.

Aberdeenangarse

Electrum wrote: »

Doomed if they raise rates doomed if they postpone

They have already lost all credibility, well I suppose they could try and claw some back

I predict a quarter point raise, then stock markets will start to crash, and next Fed meeting they will go back down to zero, but its too late they have no more bullets to fire.

Stocks continue to crash and they try negative rates, but then there is a run on the banks and chaos ensues

Stock markets have responded well, and no sign of a meltdown. I expect you're out shopping for bitter lemons to give to your family for Christmas.

mystic_trev

Generali wrote: »

FWIW, our macro guys at work see a rate hike each quarter through 2016 so the target rate being 1.25-1.5% at the end of 2016 with QE continuing to be rolled over.

As for the UK, imagine that the first rise will come in before Easter and rates will be at least 1% by the end of 2016.

chucknorris wrote: »

He predicted on another thread in the new year, so quite soon.

Further up the page! Missed it.....doh!