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

Crashy_Time

HAMISH_MCTAVISH wrote: »

LOL.

Ok then....

To be fair though the thought of a certain portion of Brexiteers seething with rage because the outcomes they wanted aren't happening is..... well..... entertaining.

Base rate down to 0.25% and another reduction on the cards shortly - Carney leaning on the banks to pass it on even when they are inclined not to - Another huge glug of £200bn QE - and £100bn in new funding for lending money from the BOE to ensure mortgages keep flowing.

The debased currency likely to lead to material quantities of overseas money flowing in to buy up UK houses at bargain prices (in real currencies anyway) while at the same time causing inflation here in the UK 12 months from now that will no doubt be ignored by the BOE again.

I mean Crikey Graham......

You really can't win can you? :rotfl:

Probably too little too late for your home town though Hamish?

mayonnaise

Graham_Devon wrote: »

The BOE, specifically Mark Carney was actually stating that your mortgage would likely increase due to interest rate rises if the result was brexit.

Weird, as he was clearly pointing at base rate cuts before the vote.

18 May: Carney sets scene for Brexit rate cut
http://citywire.co.uk/money/carney-sets-scene-for-brexit-rate-cut/a906599
9 May : Carney tells banks to prepare for rate cut in event of Brexit
https://www.moneymarketing.co.uk/carney-tells-banks-to-prepare-for-rate-cut-in-event-of-brexit/
I notice a growing trend from our resident brexiteers to rewrite history.

HAMISH_MCTAVISH

mayonnaise wrote: »

I notice a growing trend from our resident brexiteers to rewrite history.

Yep....

Although to be fair some of the usual suspects have form in that department so it's hardly surprising.

CLAPTON

HAMISH_MCTAVISH wrote: »

LOL.

Ok then....

To be fair though the thought of a certain portion of Brexiteers seething with rage because the outcomes they wanted aren't happening is..... well..... entertaining.

Base rate down to 0.25% and another reduction on the cards shortly - Carney leaning on the banks to pass it on even when they are inclined not to - Another huge glug of £200bn QE - and £100bn in new funding for lending money from the BOE to ensure mortgages keep flowing.

The debased currency likely to lead to material quantities of overseas money flowing in to buy up UK houses at bargain prices (in real currencies anyway) while at the same time causing inflation here in the UK 12 months from now that will no doubt be ignored by the BOE again.

I mean Crikey Graham......

You really can't win can you? :rotfl:

so prior to brexit we had a wall of overseas money buying up UK businesses, property and assets generally which kept the pound over valued, inspite of our record trade deficit;
now with brexit we have a wall of money buying up houses but not keeping the pound overvalued.

on balance I would prefer that UK businesses and other assets weren't bought en mass by foreigners so we seem to have one positive for brexit.
and a second positive by having a more rationally value pound to boast exports.

HornetSaver

A 0.25% drop is much of a muchness.

The correct decision in light of Brexit was to take whatever decision made exports more competitive, which in principle meant a sizeable rate cut. The problem is that the MPC has already run out of room. If rates were currently at historically low levels (1.25% to 1.75%), then a 1-1.5% cut to 0.25% would have been possible, even likely. It would have had a demonstrable impact on the currency, a noticeable impact on exports, and would have been a clear signal that we were relaxed about the downwards trend and were in control of the situation.

On the extremely narrow topic of exchange rates, this control is in contrast to the Brexit prelude and outcome. Excluding all political opinions one way or the other, it's an undeniable fact that Sterling was relatively stable vs the Euro and Dollar prior to November 2015, compared to the story since (both before and after the result). It has trended downwards since, but has been so volatile as to make it impossible to tell where the exchange rate is likely to settle up and what is going to drive its movement towards that level.

The interest rate drop is a signal that the MPC wishes the exchange rate to settle at a lower level than before the referendum process started, but the size of it is too small to have a tangible effect. If it were larger, the actual current exchange rate would probably be the same, but irrespective of Brexit negotiations there'd be a larger degree of confidence that the trend was being driven as much by policy decisions as by speculation and complex negotiations.

Okay, now to bring this firmly into the realm of politics. Brexit has undeniably created uncertainty and volatility - whether that's a necessary process for the long term good of the country, or self inflicted madness with few upsides, really depends on how you voted. But regardless of which was you voted, surely you'd agree that the more movement which can be put down to conscious policy making, the less worried we need to be about it?

It's all well and good to talk about market noise, but the Brexit process could conceivably take until 2021 to implement and a further year or so for the economic effects to become clear. That's a very long time for market noise to dictate the value of the currency, bearing in mind that the MPC has little further room to move in either direction.

Pobby

mwpt wrote: »

What did they expect? I find it so ironic that almost the entire forum over there was frothing at the mouth at the prospect of brexit, thinking it would give them their HPC. But government has indicated time and again that it'll do virtually anything to keep our house price based economy going, so interest rate cuts and QE were always going to be the result in the DIY brexit recession.

House price based economy. Sort of get you on that and that`s a worrying situation. Never thought of it that way.

sann420

I dont know how changing rates from 0.5 to 0.25 will change anything. Markets run on sentiment and at the moment there is a lot of uncertainty and BOE is only increasing it with these desperate looking measures. Silly move IMO.

Electrum

Graham_Devon wrote: »

I must admit, I do question what they feel doing more of the same is going to achieve.

And seems I'm not the only one questioning this listening to 5live this morning. Seems almost everyone, bar the BOE and those involved in housing seem to be questioning what this will actually achieve.

The head of a BTL services company was almost praying for the cut this morning suggesting it will be a real driver in the BTL scene and fantastic for BTL sentiment as many in the game have been fearing interest rate increases. I'm sure more BTL will sort out the countries issues....

The definition of madness, keep doing more of what doesnt work and hope for a different outcome.

Electrum

DividedNation wrote: »

That guy at the BoE is an idiot.

If he want to increase growth he should double benefits.

Easy.

He should hammer the operations and redistribute their cash.

Yes if your going to expand the currency supply then dont just give it to the rich. Why not really turn up the currency abuse, make it £50trillion a year created out of thin air and invest in infrastructure like the Chinese are doing.

Why not do a helicopter drop of currency, give every UK citizen £1000 every six months.

That would put them in the front of the race to debase

cells

Electrum wrote: »

Yes if your going to expand the currency supply then dont just give it to the rich. Why not really turn up the currency abuse, make it £50trillion a year created out of thin air and invest in infrastructure like the Chinese are doing.

Why not do a helicopter drop of currency, give every UK citizen £1000 every six months.

That would put them in the front of the race to debase

The BOE gave virtually all its 'printed money' to the government who spends it mostly on the old and the sick