When's the first interest rate rise going to come?

HornetSaver

michaels wrote: »

27 feb 16 1.38.6, currently 1.39.6

It has swung between 1.34 and 1.51 over the last 24 hours.

michaels

Also interesting that whilst the ftse is down 4.5% the DAX is off 6% and the Cac40 nearly 7.5%.

Anyone remember the gloom of Black Wednesday when the gbp left the exchange rate mechanism...and the diveregent performance of the UK and european economies thereafter

danslenoir

Strong speculation that the Bank of England will slash base rates over summer to try and counter the effects of the economic shock we are inevitably going to find ourselves dealing with.

mwpt

mwpt wrote: »

The market seems to agree. Risk off mode means 10 Year Gilt yields plunged 20% this morning. This means people are happy to buy UK debt for even lower returns than ever before. Part of this is safety but my guess is part of it is because they do not expect any rise in interest rates for some time.

And I hadn't checked 2Y yields. Down 38% this morning!

People are buying UK debt for 0.2% yield instead of 0.5% yield from yesterday. The market certainly expects interest rates to go down, not up.

Generali

danslenoir wrote: »

Strong speculation that the Bank of England will slash base rates over summer to try and counter the effects of the economic shock we are inevitably going to find ourselves dealing with.

Slash rates! To what?

If interest rates are going to be forced up by this then you'll need to see sterling come off at least another 10%.

I'd say it's a little early for Brexit supporters to point to the market reaction and say that all is well. Let's have a look at the investment figures in a year or so and then see where we are.

It is a slightly odd reaction to claim all is well because some markets are doing even worse! How do you know that the Bank of England isn't on the bid side?

StevieJ

Inward investment is going to be the real loser, I was surprised at Sunderland vote as they have been on the receiving end of the big Nissan investment. No more I fear

StevieJ

michaels wrote: »

Also interesting that whilst the ftse is down 4.5% the DAX is off 6% and the Cac40 nearly 7.5%.

Anyone remember the gloom of Black Wednesday when the gbp left the exchange rate mechanism...and the diveregent performance of the UK and european economies thereafter

That was obviously going to be a relief as we joined at the wrong rate in the first place. I know we were cheering at work when we saw that.

Generali

StevieJ wrote: »

Inward investment is going to be the real loser, I was surprised at Sunderland vote as they have been on the receiving end of the big Nissan investment. No more I fear

I suspect we'll see inward investment fall to roughly £0 until this is resolved after previously made decisions have been worked through.

mwpt

Generali wrote: »

Slash rates! To what?

0? Negative? Who knows. Governments are still stuck on the stupid idea that they can make everything right by allowing people to accrue more debt for cheaper. The market seems to think we're in for an economic drop and therefore expects more rate cuts.

If interest rates are going to be forced up by this then you'll need to see sterling come off at least another 10%.

At least! I honestly don't know that they'd do anything much with rates until 20-30% drops.

And surely this reveals the trap of low rates?

Btw, do you have a job for programmer nerd at your fund? I'm very presentable for a nerd. I play rugby too, which should work in my favour in Sydney. I don't drink much lager anymore but hey.

Keep_pedalling

Just had an email from Assetz Capital, one of the P2P lenders I have a small amount of savings with, and here is what they are saying about interest rates

Given we think that the Bank of England will act to support the economy rather than support the pound the base rate will probably go to zero very quickly now and they could in fact go negative (contrary to protestations that wouldn’t happen as it has in several other countries) and we could also see bank savings accounts go to near zero interest rates to reduce demand from savers because we also expect to see banks quickly reduce lending to businesses and housebuilders again and they will therefore have less need for those deposits. The Prudential Regulation Authority will also probably step in and impose tougher requirements on banks that hurt their profits and that will also lead to further reductions in lending to businesses and developers and hence the banks’ and housebuilders’ share price falls this morning by around 35%. Nonetheless this benefits our investors like you and we discuss this below.

So not good news for savers or people needing business loans.