Bank of England rates could rise more than thought

michaels

lisyloo wrote: »

http://www.bbc.co.uk/news/business-43724002

RICS raise rise doubts.
Personally I think the decision does not revolve around the housing market as much as RISC and some posters think although undoubtedly there is an effect on consumer spending.

It is a VI though, init - whose incomes are most impacted by a stalling housing market?

Personally I think the UK economy is going to be weaker this year than forecast because of falling domestic demandmore than offsetting global strength - all that assuming we are not in WW3 or a massive trade war.....

However I don't think the mpc will realise this until they have made a couple of rate hikes which it will then be too embarrassing to reverse. People seem to think we are like the US - the US has just embarked on a massive fiscal easing (requiring a matching monetary tightening) - excluding an early GE with a Corbyn win I can't see that happening.

Thrugelmir

michaels wrote: »

the US has just embarked on a massive fiscal easing (requiring a matching monetary tightening) -

The UK likewise. The BOE has been providing funding to the banks under various schemes since 2008. The US is simply 2/3 years ahead on the curve. They were hit earlier than the UK. Europe is lagging behind.

michaels

Thrugelmir wrote: »

The UK likewise. The BOE has been providing funding to the banks under various schemes since 2008. The US is simply 2/3 years ahead on the curve. They were hit earlier than the UK. Europe is lagging behind.

Fiscal easing - I guess at the edges but I am not expecting an election buying giveaway for a couple of years

And I think Europe is going to have to stamp on the monetary brakes pretty sharpish, yes they were behind the curve in QE but they are still going now even with for Europe above trend growth over 2%.

AG47

If anybody thought interest rates wouldn’t go back to normal then they were delusional

Thrugelmir

michaels wrote: »

And I think Europe is going to have to stamp on the monetary brakes pretty sharpish, yes they were behind the curve in QE but they are still going now even with for Europe above trend growth over 2%.

One size may not fit all though. Inflation remains low. The Bundesbank isn't totally aligned with the ECB's policy.

westernpromise

AG47 wrote: »

If anybody thought interest rates wouldn!!!8217;t go back to normal then they were delusional

Mortgage rates already are normal, more or less. Get used to the new normal.

If you think normal means the double-digit figures seen, in the last 300 years, in only 20 of them, all of which were between 1970 and 1995, well, dream on. We haven't had base rates over 10% in a quarter of a century.

Interest rates rises aren't going to buy you a bargain house.

Nor will your bitcoins. They're 60% down off their peak and like the dotcom bubble there'll be another one along soon to take them right back down to £1. The clue is that the peaks are lower and so are the troughs.

There's no secret. It's just hard work and patience.

economic

westernpromise wrote: »

Mortgage rates already are normal, more or less. Get used to the new normal.

If you think normal means the double-digit figures seen, in the last 300 years, in only 20 of them, all of which were between 1970 and 1995, well, dream on. We haven't had base rates over 10% in a quarter of a century.

Interest rates rises aren't going to buy you a bargain house.

Nor will your bitcoins. They're 60% down off their peak and like the dotcom bubble there'll be another one along soon to take them right back down to £1. The clue is that the peaks are lower and so are the troughs.

There's no secret. It's just hard work and patience.

Completely agree.

Rates will stay low for a long time unless there is a debt crisis which is not out of the question - by which time you want to be in stocks and cash and gold.

Best to not worry about the worst and just position yourself for the most likely range of scenarios. For me this means own my own home and have the rest of my wealth in stocks mainly and a bit of cash.

I really do not understand why people are so stupid to fall for crypto currencies.

AG47

Normal rates are 5% or Therabouts for the last few hundred years.

You can't change history. The last ten years has been a small blip over the last 350 years.

If interest rates are kept down for much longer then the consequences are serious.

They have to go back up soon, or it's obvious that the crisis never ended in 2008, it was just pushed into the future and made worse.

People talk about the global financial crisis in past tense, well why are we still at temporary emergency low interest rates?

The answer is nothing was solved back in 08, and if interest rates stay low for much longer then the cat is out of the bag

Filo25

Inflation came in weaker than expected this month, while at the start of the year I thought we would be looking at anywhere between 1-3 rate hikes this year I would say 3 is pretty much off the table at this stage, inflation looking more subdued than expected and some signs of weakness in patches of the broader global economy

GreatApe

AG47 wrote: »

Normal

What has been 'normal' about the last 100 years?

Pre 1945 a different world
1945-1990 boom in electricity/electric-motor driven growth (Just like china 1990-Now) and infrastructure build out
1990-2020 Digital age
2020-2040 AI age

There is no normal in anything why would the cost of capital be the same in a period when a nation is building train tracks and power stations for billions compared to a period when a nation can just spend ten million changing from analog to digital signalling to double capacity or where simple efficency improvements mean not only do we not need more power stations but can close some of the existing ones?

There is no normal you would find it hard to compare more than twenty years apart.

Also the base rate is not very relevant its more to do with the rates you can actually borrow at. While the base rate went from 5.75% to 0.5% mortgages went from about 5.5% to 3% and likewise if rates go up from 0.5% to 4.5% mortgage rates wont go up from 3% to 7% they will go from 3% to 5%