Rate predictions

Aberdeenangarse

Swap rates continue climbing this morning indicating further increases in the fixed rate mortgage market.

gener8or

Hi gang, interesting few weeks since I started this thread. We have a massive u-turn on policies, the chancellor was replaced and the PM was replaced. We seem now to have a steady pair of hands in charge and guilt rates are dropping. However we still have high inflation and BoE interest rate review is imminent.
Deep recession imminent.

So how do people feel about future interest rates.

Serve_the_Servants

gener8or said:

Hi gang, interesting few weeks since I started this thread. We have a massive u-turn on policies, the chancellor was replaced and the PM was replaced. We seem now to have a steady pair of hands in charge and guilt rates are dropping. However we still have high inflation and BoE interest rate review is imminent.
Deep recession imminent.

So how do people feel about future interest rates.

I don’t see a steady pair of hands at the helm. I see another mad Tory - this time a billionaire who is completely disconnected from the pain the British population are going through.

Rate rises are a bit of a sideshow to be honest. The bigger issue that’s not being widely reported to the masses across BBC or Sky News, is the unwinding of quantitive easing. 

The BOE still plans to do this, though it had been forced to delay. It was all that printing of money that helped spike inflation in the first place - probably the biggest unreported input cost when all is boiled down. It’s obviously also helped to devalue sterling. 

On 1st November the BOE will start selling bonds and the world will be watching (as they are the first to do so) It’s unlikely they will dare to carry large rate increases at the same time, as that really would be very high risk. Hence the timing of them saying there won’t be as much of an increase as the market expects. 

The may as well have waited until 5th November so that we could really view it for what it is - a bonfire sale. Google the implications if you’re interested. There are some articles out there. 

The Washington Post notes ‘Central bankers have been remarkably reticent to discuss the potential dangers of a twin tightening of monetary policy by simultaneously raising borrowing costs and unwinding bond purchases’ 

Meanwhile, all that QE is starting to become even more expensive for the taxpayer in other ways. Bloomberg reports that the treasury has just transferred £11billion to the BOE to cover projected losses in its bond buying programme. The government had already made an £828million advance. 

Due to all of the market chaos, the BOE is in trouble with QE costs. They need to unwind it all, but in doing so it could cause even more chaos. Watch this space. 

Also isn’t it very strange how all of this is not widely reported by popular news outlets - or is it really that strange after all? Doubt the powers that be would want the masses to join the dots between a truly massive QE scheme and the huge pain in the wider economy. It’s the single most unreported issue, which is simultaneously the single biggest cause of damage to our living standards.

Similarly with America. The dollar has lost 90% of its value since the 1970s. That is the main driver of reduced spending power. Again, the fact itself and also the reasons behind it are not widely reported, so the population at large are just not aware. The same fundamentals are driving Sterling down but the main news outlets distract with other causes such as the war in Ukraine, COVID and Brexit. They are small fry compared with QE. 

Funny that the main news outlets just report on the causes the BOE gives them. COVID, Brexit, Ukraine etc. None of them ever question why the BOE omits the main reason in their reports. Obviously it’s because they would never want to publicly admit that it’s actually them themselves who are the cause of massive inflation (and why it will remain high long after the other factors cease to be an issue) Though I’m sure they’ll find some other excuse/distraction to roll out by then. 

It won’t really matter as much what the central bank interest rate ends up being. The bond market is turning bearish and the BOE are about to start their bond sale on 1st November. The first lot of sales which will have more of an influence on mortgage rates than most people think. The wider world is watching what the UK does next, and it’s not going to be pretty. It also means the BOE will lack the firepower to really tackle inflation and the cycle will be perpetuated. 

Serve_the_Servants

CNBC from just a few days back. The Americans report more about the real issues in the UK than we do ourselves.