Bank of England rates could rise more than thought

michaels

So last fix I went for 5 years as 'obviously' rates would increase in that time frame. This time I am wondering whether regular 2 year fixes at 1.25% will be cheaper over 5 years than a 5 year fix at 1.8%.....

And as for savings rates for my mortgage stooze stash, have just had a letter today saying 90k that was at 2% will be reduced to 0.2% in July

HPC_Ghuol_Hunter

So just as I predicted, no rate rise. Again. As I said this thread is nothing short of fear mongering scaring people into fixing or ending up a HPC drone rent forever looser.

westernpromise

If it turned out that HPC were owned by Fergus Wilson, I wouldn't be that surprised. That site does a fine job getting people to groupthink their way into being perpetual tenants. Anyone who speaks against the groupthink gets banned instantly. It's as though it exists to keep landlords in business.

Graham_Devon

Forward guidance seems to be reversing again.

Now we are likely to see up to 6 interest rate increases of 0.25% over the next 3 years as data has changed again. (really, data changes!?)

This is as Carney is being grilled on his use of forward guidance, to which he is just saying he changes when the data changes (in a nutshell).

GreatApe

The BOE track record is very good, the average inflation over the last 10 years has been 2.8% which is spot on.

There are too many vested interest that want higher rates for their own ends, the BOE has done a good job as evidence by the facts.

The only thing I would change is to go from an annual target to a three year rolling target

Graham_Devon

GreatApe wrote: »

The BOE track record is very good, the average inflation over the last 10 years has been 2.8% which is spot on.

Spot on? I'ts nearly 50% over target.

How you class that as spot on is confusing to say the least.

While not wishing to pretend this is an easy game, looking over a 10 year period is pretty pointless as it will also include the extreme low inflation we saw in periods which are no longer relevant to today.

A period of 3 years would be more widely acceptable, but I assume 10 years has been chosen for that very reason (it includes periods of very low inflation allowing you to make your point).

GreatApe

Graham_Devon wrote: »

Spot on? I'ts nearly 50% over target.

The target is a 2% plus or minus 1% and 2.8% over the decade is in that range.

While not wishing to pretend this is an easy game, looking over a 10 year period is pretty pointless as it will also include the extreme low inflation we saw.

Likewise we had 0 and even negative inflation for a period. Which is why looking at just one year is stupid. The target should be a 3 or even 5 year rolling average not a 12 month rolling average.

A period of 3 years would be more widely acceptable, but I assume 10 years has been chosen for that very reason (it includes periods of very low inflation allowing you to make your point).

Inflation has been spot on the BOE has done a good job

Thrugelmir

Graham_Devon wrote: »

This is as Carney is being grilled on his use of forward guidance, to which he is just saying he changes when the data changes (in a nutshell).

Might as well say nothing and let the market speculate. What in principle seemed a good idea at the time has run it's course.

Graham_Devon

The stage is being set for the next rate change to be a reduction in interest rates - not a rise, and more QE.

The stage has also been set to let the inflation target go.

And who knew - the rate rises he talked of in Feb and May? Now they were predicated on a smooth brexit process.

Mark Carney has signalled the Bank of England would be prepared to cut interest rates !!!8211; or freeze plans to increase them !!!8211; in order to support jobs and economic growth should Britain be plunged into a disorderly Brexit.

He also linked to consumer spending and a housing market "showing signs of decline" as a reason that interest rates could either remain as they are or be reduced.

Stay tuned for next weeks forward guidance update.... :undecided

https://www.theguardian.com/business/2018/may/24/bank-england-ready-act-uk-faces-disorderly-brexit-mark-carney-says

caronoel

You sound wise Graham. How have your own predictions over the last decade of a crash worked out?

Do you still live with your mummy? Must be fun in your forties.