Everything in place for a US rate rise

Graham_Devon

Jobs are on track, economy is on track and Yellen has given the strongest hint ever that everything is now in place to see a rate rise at the December meeting.

So with the US highliy likely (though not concrete yet) to raise rates and the EU expanding QE and monetry stimulus again yesterday (extension to QE and a further cut on deposit rates to -0.3%)....

... Where does it leave good old Blighty?

cells

...in the middle

michaels

I know Gen sees UK rates rising soon after the US but I am not quite sure what the mechanism is for this? UK obviously has a very benign inflation outlook currently and if anything the economy is softer than was anticipated 6 / 12 months ago with nominal wage increases falling back and it looks like no propensity of any wage increases to be spent - I guess the delay in cutting tax credits has left a bit more demand in the economy than had been anticipated but we are talking only a couple of billion pa.

I still think no move in the UK before next summer at the earliest.

wotsthat

I still think US rate rise + 3 months or so.

I see no real reason to change though other than to reduce when the next recession starts.

Thrugelmir

Graham_Devon wrote: »

... Where does it leave good old Blighty?

The US will do what the US needs to do as the economy is insular. The rest will be forced to follow along behind. Just to maintain stability. Whether they like it or not.

Generali

Graham_Devon wrote: »

Jobs are on track, economy is on track and Yellen has given the strongest hint ever that everything is now in place to see a rate rise at the December meeting.

So with the US highliy likely (though not concrete yet) to raise rates and the EU expanding QE and monetry stimulus again yesterday (extension to QE and a further cut on deposit rates to -0.3%)....

... Where does it leave good old Blighty?

Dr Yellen has made it clear that she wants and expects rates to rise in 2015 and there's one meeting left in 2015.

I don't think it would be a catastrophe for rates to start rising in the UK, far from it in fact. I think it is a very positive sign that the economy is normalising: the banks are basically sorted, financially if not morally; the deficit is quickly coming under control; employment is rising strongly. Lots of good news out there.

chucknorris

Generali wrote: »

Dr Yellen has made it clear that she wants and expects rates to rise in 2015 and there's one meeting left in 2015.

I don't think it would be a catastrophe for rates to start rising in the UK, far from it in fact. I think it is a very positive sign that the economy is normalising: the banks are basically sorted, financially if not morally; the deficit is quickly coming under control; employment is rising strongly. Lots of good news out there.

I actually think it'll be a good thing if rates creep up, eventually the populous will 'man up' after getting over the initial negative sentiment carp (with bears running down the street in their underpants screaming we are all doomed) and realise, we need to get back to normal eventually, and this is just the first small step in that direction. Nothing is going to happen fast. That's my 2 cents anyway.

downshifter98

I have a feeling that a rate increase will be seen far more positively by markets than people are expecting - any sign (real or not) of things finally getting back to some kind of normal will just be a massive relief. UK wise I think the economy will be perkier than expected (cheap oil will continue to fire up the service sector) plus there is no way we will be able to resist what the US are doing - summer 2016 at the latest IMHO.

michaels

When it comes to the base rate is it the real or nominal rate that matters? Compared to a couple of years ago when inflation was at 5% real interest rates are 5% higher, if this had happened via rate increases rather than inflation falling their would certainly be squeals.....

kabayiri

chucknorris wrote: »

I actually think it'll be a good thing if rates creep up, eventually the populous will 'man up' after getting over the initial negative sentiment carp (with bears running down the street in their underpants screaming we are all doomed) and realise, we need to get back to normal eventually, and this is just the first small step in that direction. Nothing is going to happen fast. That's my 2 cents anyway.

The story about the couple buying the 4 bed house on the HTB scheme brought home to me that we have a new generation of house buyers who have never known the concept of rate changes.

I don't think it's a bad thing to send out a message that rates can change and people need to include some buffer space in their finances.

chucknorris

kabayiri wrote: »

The story about the couple buying the 4 bed house on the HTB scheme brought home to me that we have a new generation of house buyers who have never known the concept of rate changes.

I don't think it's a bad thing to send out a message that rates can change and people need to include some buffer space in their finances.

I totally agree, but if they don't already know that, they shouldn't really be buying, although I'm not trying to deny that a significant percentage of the population are just not with it, when it comes to managing their finances.