Should Mark Carney Shut Up?

Graham_Devon

purch wrote: »

i'm talking more about the FX markets.

GBP's recent slide is due to the perception that our Base Rate is out of step with our underlying economy. When commentators talk about interest rates and exchange rates they often over simplify the relationship, but in reality a currency will be sold when the market spots a discrepancy.

The FX markets clearly do not have the same confidence in the UK economy as they were showing 6-12 months ago. I very much doubt that the constant witterings from the Guv'nor is helping that confidence much either.

The money markets are reflecting the actual level currently, they do not reflect expectations as much.

Interestingly, there is talk (from Davos) from commentators that the US may be forced to cut rates.

This in itself is worrying, as markets had a good year to accomodate the rise. But secondly, if the US starts destroying itself (and other economies) by increasing interest rates by 0.25%, where exactly does that leave the worldwide economy? Paralysis?

purch

Graham_Devon wrote: »

Paralysis?

Hopefully for Carney's jawbone :eek:

worldtraveller

Graham_Devon wrote: »

Interestingly, there is talk (from Davos) from commentators that the US may be forced to cut rates.

It wouldn't surprise me if they do. I always thought it was not a good time to raise them when they did.

Graham_Devon

worldtraveller wrote: »

It wouldn't surprise me if they do. I always thought it was not a good time to raise them when they did.

Is there a good time?

That seems to be the worry at the moment. We could be approaching another downtime while still on emergency support from the last one.

If the world can't take a rise in interest rates of 0.25% in the US, what does it say about this "recovery" we keep hearing about?

Jonbvn

MPD wrote: »

Forward guidance made no difference to my mortgage choices. I could have gone for a fix where 5 years was 2.54% and shorter terms were slightly lower, a tracker at base + 2.49% or SVR of 4.49%. The fix was a clear winner, cheaper initially and no chance of increasing for 5 years.

The forward guidance is rates will rise, maybe at time x. Part 1 of the statement is right, part 2 will be right at some point.

The tracker is rubbish. We got BOE+1.49% 18 months ago.

worldtraveller

Generali wrote: »

Investment banking is a declining industry rather as steel and coal were 30 or 50 years ago.

Barclays to slash about 1,000 investment banking jobs worldwide

worldtraveller

Graham_Devon wrote: »

Is there a good time?

Fair comment, maybe not. However, I didn't see it as prudent doing it, as they did, just as the global economy was turning down. I also still believe that the decision was, in part at least, credibility based, since, as we all know, there was a lot of "noise" from the Fed leading up to the rise, as well as an almost universal market expectation for it at the time.