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

mwpt

N1AK wrote: »

My error. I had incorrectly assumed the discussion was related to the BoE base rate rather than interest rates in general. Clearly they did say the interest rates we would pay as a nation would rise, something I've seen little evidence of so far; whether we would have if it wasn't for the actions the BoE has already taken is harder to determine.

When a country is seen as riskier then in a true market free of intervention, our borrowing costs should rise. So technically, Carney was correct. But he obviously knows we haven't had a true market for government bonds for 8 years since the central banks became the buyer of last resort.

The BoE failed to fulfil it's £1.17 billion order of government debt back from private industry earlier this week. Not enough sellers. Either people were holding on to their bonds thinking the central banks actions would send the prices higher still (they were correct), or some have suggested the BoE didn't give the larger funds enough time to prepare for the buy back.

Either way, yields on gilts are being further suppressed. Some have become inverted, meaning longer term debt is somehow less risky than shorter term debt. It's not, but the bank was buying longer term debt, not shorter, so you can see the distorting effect of intervention in action, regarding pricing risk.

To me, I don't see a way back from this. I've always thought that once they cornered themselves with low rates. I would not bet against the true market one day breaking the central banks, but for the meantime, yield suppression will continue and to bring this back on topic of house prices, I cannot see anything but a trend of upward pressure as rates continue to drop (short term dips from uncertainty may be present).

I'm very tempted to upgrade to a pricier house sooner rather than later because I don't see it becoming easier in the future.

pop_gun

iantojones40 wrote: »

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.

Just you wait until negative interest rates are sold to us as a good thing.

You ain't seen nothing yet!