Bank Of England MPC - Interest Rates CUT to 0.25% + QE increase £60 Billion

Graham_Devon

mwpt wrote: »

Yes. Well, actually, on the day of the outcome of the referendum, but my thought process was already there, and this was before anything had actually changed:

Fair play to you then, and well done on predicting the correct outcome!

You were the only one on here I have seen suggesting that though. And certainly not once did I see anyone in the media suggest your mortgage may get cheaper as the result of a brexit. All the focus was on mortgages becoming more expensive and 30% house price falls.

mwpt

Graham_Devon wrote: »

However, the biggest damage to sterling has come from Carney talking the economy down, and now, this.

Look, you've got to get over that view. In order for it to be true, Carney must be such an malicious egomaniac that in order for his views to be proved correct about GBP, he is willing to sacrifice jobs, families and lives. That is just too far a stretch.

The most likely explanation is that all the indicators (as presented by our new friend fafafafasomething) are turning negative and the BOE are reacting to this.

wotsthat

Graham_Devon wrote: »

You've been saying yourself that a brexit will cost people more as sterling is damaged.

There's no point trying to equate a 0.25% decrease in the base rate to the Brexit decision - one is very very small and the other is very very big.

Graham_Devon wrote: »

However, the biggest damage to sterling has come from Carney talking the economy down, and now, this.

No, it's from people betting that there will be less demand for Sterling in the future.

Graham_Devon wrote: »

If things are costing people more, people have less left over to save or, have to cut back on other stuff.

Don't blame me - I voted remain. I think I mentioned stuff would cost more if we voted to leave the EU.

Graham_Devon wrote: »

This may not effect you or I all that much. But let's not pretend there isn't swathes of the population out there, both young and old whom are on fixed incomes whom this will hurt.

I'd prefer higher interest rates because [STRIKE]I'm really worried about people of triple locked fixed incomes[/STRIKE] it suits my current agenda.

Rinoa

Project Fear April 15

George Osborne has issued a stark warning that mortgage rates will rise if Britain leaves the European Union.
The chancellor said he thought it was likely interest rates, and therefore the cost of home loans, would rise if Britons vote to leave the EU in the referendum on 23 June. But Brexit campaigners accused Osborne of panicking and resorting to intimidating voters.

Asked if he thought the cost of mortgages would increase on a British exit from the 28-nation bloc, Osborne said: “The short answer is yes. I think that is likely, but I’m not in charge of interest rates.”

He said minutes of the Bank of England’s monetary policy committee, which sets interest rates, contain “repeated reference to the fact that there is an inflation mandate and they will stick to delivering their inflation mandate”.
The chancellor’s argument is that if there is a vote to quit the EU, sterling would slump and that would push up the cost of imports. That would mean rising prices and the MPC would have to act to prevent inflation taking hold.

He said this could lead to the MPC raising interest rates from their all-time low of 0.5% - where they have sat since 2009. “You would have rising prices and a Bank of England with an inflation target committed to respond to that,” Osborne said at the International Monetary Fund (IMF) spring meetings in Washington on Friday.

Filo25

Graham_Devon wrote: »

You've been saying yourself that a brexit will cost people more as sterling is damaged.

However, the biggest damage to sterling has come from Carney talking the economy down, and now, this.

If things are costing people more, people have less left over to save or, have to cut back on other stuff.

This may not effect you or I all that much. But let's not pretend there isn't swathes of the population out there, both young and old whom are on fixed incomes whom this will hurt.

Do you actually believe this, from what I recall Sterling managed to fall of the end of a cliff quite happily on its own before Carney uttered a word on the morning after the Brexit decision.

The economic outlook has genuinely deteriorated as confidence has collapsed and uncertainty is running rampant.

For the record I don't think this cut will do a great deal to stimulate the economy but as I already said its all Carney can do really, any meaningful economic stimulus will have to come from loosening fiscal policy, but the government has already said it won't be taking any action until the Autumn statement and I have my doubts as to how much fiscal stimulus will be applied then in any case for all of Theresa May's comments about moving away from austerity.

mayonnaise

Filo25 wrote: »

The economic outlook has genuinely deteriorated as confidence has collapsed and uncertainty is running rampant.

For the record I don't think this cut will do a great deal to stimulate the economy...

Agreed. This fiscal stimulus is not going to matter one bit if business confidence continues to fall off a cliff.
To stop this happening, the May Government should abandon their utterly harmful 'brexit is brexit' mantra and guarantee the continuation of free movement of people, capital, services and goods, no matter when or if Article 50 will or will not be triggered.
This may not please the under-educated, unwashed brexit voting plebiscite, but it really is the only way.

westernpromise

mayonnaise wrote: »

Agreed. This fiscal stimulus is not going to matter one bit if business confidence continues to fall off a cliff.
To stop this happening, the May Government should abandon their utterly harmful 'brexit is brexit' mantra and guarantee the continuation of free movement of people, capital, services and goods, no matter when or if Article 50 will or will not be triggered.
This may not please the under-educated, unwashed brexit voting plebiscite, but it really is the only way.

Does May have to care if the economy tanks? It will be easily attributable to Brexit, which is what the punters wanted, so her government - which advised against it - can't be blamed for it.

In the same way that White Wednesday was beneficial but the Major government didn't get the credit (because it was the opposite of that government's policy), Brexit may be harmful but the May government won't get the blame (because it was the opposite of that government's policy).

Filo25

westernpromise wrote: »

Does May have to care if the economy tanks? It will be easily attributable to Brexit, which is what the punters wanted, so her government - which advised against it - can't be blamed for it.

In the same way that White Wednesday was beneficial but the Major government didn't get the credit (because it was the opposite of that government's policy), Brexit may be harmful but the May government won't get the blame (because it was the opposite of that government's policy).

I think a competent opposition would still bury them if they didn't have an adequate policy response to Brexit, which meant we had a moderately severe recession.

Fortunately for Theresa May, she doesn't have to worry about having a competent opposition

iantojones40

Graham_Devon wrote: »

Just listened to a business owner who deals with chinese inputs as his staple good. He doesn't want more debt. He states this is just going to make it even harder for him to stay competitive as the pound reduces again. The only way therefore for him to cut costs is to look at reducing staff.

He feels the BOE seems concerned only by those taking on more debt, trying to sell an idea that you are wealthier if the increased debt is cheaper than it was last week.

The same on State TV this morning, a boss of a sticky tape factory was being interviewed and he kept trying to make the point that he had wider concerns about the state of the economy and manufacturing in general, but the State TV interviewer just ignored that and kept pushing the point that lower IR's would mean it's cheaper for him to borrow money to expand... why the hell would he want to expand when the whole economy (property market excluded of course) is going down the pan!

Then later also on State TV a nice young well spoken lady was reading her lines perfectly, extolling the fact that lower IR's were "the only way she could afford to buy a property"... seriously, North Korea has nothing on us when it comes to force feeding propaganda to the uninformed masses.

Jack_Johnson_the_acorn

iantojones40 wrote: »

Why is this fantastic news for people who own their own home?

Are you seriously that dim? Or are you being severely pedantic over the word "homeowners".

I'm sure you already know that one doesn't have to own a house outright to be classified a "homeowner"......