BOE and a recession.

Aberdeenangarse

lmitchell said:

TonyTeacake said:

lmitchell said:

TonyTeacake said:

I totally agree and in the long term interest rates will keep rising.

That's not necessarily true. Deflation is anticipated in the US next year, which will force the Fed to pivot mid-2023. Yes, energy prices are still going to play a part in the UK and Europe, but if core inflation begins to fall here and the remainder is intrinsically linked to energy, BoE is unlikely to penalise the taxpayer for this. I think we're looking at an interest rate environment of 3.00-4.00% for the next 10 years IMO. Still historically low, but a huge step up from the previous decade.

Yes this is key what you say "Deflation is anticipated in the US next year".

Now this is what they anticipate but I really can't see it happening. High inflation and high interest rates for the most of this decade.

Judging by your posting history, you've been insistent on this for a long, long time. This is not a forum for fantasy economics. It's important to be real about the picture. The era of free money is over - Covid has put paid to that - but a bank rate of 3%+ IS a high interest rate in the context of the LAST decade. A bank rate of 5-6% would cripple the government as well as the housing market, so unless you're a sadist I don't see why you would want that to happen to people. Hence why Hunt has done what he's done this morning.

Back in May you were predicting base rates peaking at 2% - 2.5% Do you still stand by that prediction?

lmitchell

Aberdeenangarse said:

lmitchell said:

TonyTeacake said:

lmitchell said:

TonyTeacake said:

I totally agree and in the long term interest rates will keep rising.

That's not necessarily true. Deflation is anticipated in the US next year, which will force the Fed to pivot mid-2023. Yes, energy prices are still going to play a part in the UK and Europe, but if core inflation begins to fall here and the remainder is intrinsically linked to energy, BoE is unlikely to penalise the taxpayer for this. I think we're looking at an interest rate environment of 3.00-4.00% for the next 10 years IMO. Still historically low, but a huge step up from the previous decade.

Yes this is key what you say "Deflation is anticipated in the US next year".

Now this is what they anticipate but I really can't see it happening. High inflation and high interest rates for the most of this decade.

Judging by your posting history, you've been insistent on this for a long, long time. This is not a forum for fantasy economics. It's important to be real about the picture. The era of free money is over - Covid has put paid to that - but a bank rate of 3%+ IS a high interest rate in the context of the LAST decade. A bank rate of 5-6% would cripple the government as well as the housing market, so unless you're a sadist I don't see why you would want that to happen to people. Hence why Hunt has done what he's done this morning.

Back in May you were predicting base rates peaking at 2% - 2.5% Do you still stand by that prediction?

No, it doesn't appear that way, does it? A lot has changed between now and then. But to suggest bank rate will just go up and up is, frankly, for the birds.

Aberdeenangarse

lmitchell said:

Aberdeenangarse said:

lmitchell said:

TonyTeacake said:

lmitchell said:

TonyTeacake said:

I totally agree and in the long term interest rates will keep rising.

That's not necessarily true. Deflation is anticipated in the US next year, which will force the Fed to pivot mid-2023. Yes, energy prices are still going to play a part in the UK and Europe, but if core inflation begins to fall here and the remainder is intrinsically linked to energy, BoE is unlikely to penalise the taxpayer for this. I think we're looking at an interest rate environment of 3.00-4.00% for the next 10 years IMO. Still historically low, but a huge step up from the previous decade.

Yes this is key what you say "Deflation is anticipated in the US next year".

Now this is what they anticipate but I really can't see it happening. High inflation and high interest rates for the most of this decade.

Judging by your posting history, you've been insistent on this for a long, long time. This is not a forum for fantasy economics. It's important to be real about the picture. The era of free money is over - Covid has put paid to that - but a bank rate of 3%+ IS a high interest rate in the context of the LAST decade. A bank rate of 5-6% would cripple the government as well as the housing market, so unless you're a sadist I don't see why you would want that to happen to people. Hence why Hunt has done what he's done this morning.

Back in May you were predicting base rates peaking at 2% - 2.5% Do you still stand by that prediction?

No, it doesn't appear that way, does it? A lot has changed between now and then. But to suggest bank rate will just go up and up is, frankly, for the birds.

Agreed - but thinking it’ll be coming down anytime soon is too. 

lmitchell

Aberdeenangarse said:

lmitchell said:

Aberdeenangarse said:

lmitchell said:

TonyTeacake said:

lmitchell said:

TonyTeacake said:

I totally agree and in the long term interest rates will keep rising.

That's not necessarily true. Deflation is anticipated in the US next year, which will force the Fed to pivot mid-2023. Yes, energy prices are still going to play a part in the UK and Europe, but if core inflation begins to fall here and the remainder is intrinsically linked to energy, BoE is unlikely to penalise the taxpayer for this. I think we're looking at an interest rate environment of 3.00-4.00% for the next 10 years IMO. Still historically low, but a huge step up from the previous decade.

Yes this is key what you say "Deflation is anticipated in the US next year".

Now this is what they anticipate but I really can't see it happening. High inflation and high interest rates for the most of this decade.

Judging by your posting history, you've been insistent on this for a long, long time. This is not a forum for fantasy economics. It's important to be real about the picture. The era of free money is over - Covid has put paid to that - but a bank rate of 3%+ IS a high interest rate in the context of the LAST decade. A bank rate of 5-6% would cripple the government as well as the housing market, so unless you're a sadist I don't see why you would want that to happen to people. Hence why Hunt has done what he's done this morning.

Back in May you were predicting base rates peaking at 2% - 2.5% Do you still stand by that prediction?

No, it doesn't appear that way, does it? A lot has changed between now and then. But to suggest bank rate will just go up and up is, frankly, for the birds.

Agreed - but thinking it’ll be coming down anytime soon is too. 

As I said, I now predict they'll bounce around between 3%-4% for the next 5-10 years.

TonyTeacake

lmitchell said:

TonyTeacake said:

lmitchell said:

TonyTeacake said:

I totally agree and in the long term interest rates will keep rising.

That's not necessarily true. Deflation is anticipated in the US next year, which will force the Fed to pivot mid-2023. Yes, energy prices are still going to play a part in the UK and Europe, but if core inflation begins to fall here and the remainder is intrinsically linked to energy, BoE is unlikely to penalise the taxpayer for this. I think we're looking at an interest rate environment of 3.00-4.00% for the next 10 years IMO. Still historically low, but a huge step up from the previous decade.

Yes this is key what you say "Deflation is anticipated in the US next year".

Now this is what they anticipate but I really can't see it happening. High inflation and high interest rates for the most of this decade.

Judging by your posting history, you've been insistent on this for a long, long time. This is not a forum for fantasy economics. It's important to be real about the picture. The era of free money is over - Covid has put paid to that - but a bank rate of 3%+ IS a high interest rate in the context of the LAST decade. A bank rate of 5-6% would cripple the government as well as the housing market, so unless you're a sadist I don't see why you would want that to happen to people. Hence why Hunt has done what he's done this morning.

I think you are the one who is living in a fantasy. Call me what you like but I saw this disaster coming from the beginning of the year and yes I have been insistent on how bad inflation will get and look where we are now, it is totally out of control and very damaging to the economy. BOE has been too late to act and many people are suffering through having to pay high prices for everything. Interest rates have been kept way too low for too long, all it has done is created a huge debt bubble. Go and do your research and just here in the UK personal debt is over 200 billion and this doesn't include mortgages, this is the highest it has ever been since records started since 1993. It's all a recipe for a disaster, I wish we weren't in this position but unfortunately it is the reality.

You also say "A bank rate of 5-6% would cripple the government as well as the housing market". 
Let me put it this way, if inflation is not tamed this will be a lot more damaging for everyone and it will be a lot worse than having a housing market crash because our economy will just collapse. Take a look around the world and you will see in countries where inflation has spiralled out of control their economies have collapsed.

lmitchell

TonyTeacake said:

lmitchell said:

TonyTeacake said:

lmitchell said:

TonyTeacake said:

I totally agree and in the long term interest rates will keep rising.

That's not necessarily true. Deflation is anticipated in the US next year, which will force the Fed to pivot mid-2023. Yes, energy prices are still going to play a part in the UK and Europe, but if core inflation begins to fall here and the remainder is intrinsically linked to energy, BoE is unlikely to penalise the taxpayer for this. I think we're looking at an interest rate environment of 3.00-4.00% for the next 10 years IMO. Still historically low, but a huge step up from the previous decade.

Yes this is key what you say "Deflation is anticipated in the US next year".

Now this is what they anticipate but I really can't see it happening. High inflation and high interest rates for the most of this decade.

Judging by your posting history, you've been insistent on this for a long, long time. This is not a forum for fantasy economics. It's important to be real about the picture. The era of free money is over - Covid has put paid to that - but a bank rate of 3%+ IS a high interest rate in the context of the LAST decade. A bank rate of 5-6% would cripple the government as well as the housing market, so unless you're a sadist I don't see why you would want that to happen to people. Hence why Hunt has done what he's done this morning.

I think you are the one who is living in a fantasy. Call me what you like but I saw this disaster coming from the beginning of the year and yes I have been insistent on how bad inflation will get and look where we are now, it is totally out of control and very damaging to the economy. BOE has been too late to act and many people are suffering through having to pay high prices for everything. Interest rates have been kept way too low for too long, all it has done is created a huge debt bubble. Go and do your research and just here in the UK personal debt is over 200 billion and this doesn't include mortgages, this is the highest it has ever been since records started since 1993. It's all a recipe for a disaster, I wish we weren't in this position but unfortunately it is the reality.

You also say "A bank rate of 5-6% would cripple the government as well as the housing market". 
Let me put it this way, if inflation is not tamed this will be a lot more damaging for everyone and it will be a lot worse than having a housing market crash because our economy will just collapse. Take a look around the world and you will see in countries where inflation has spiralled out of control their economies have collapsed.

There's no such thing as a debt 'bubble'. Did you expect people not to buy and borrow to live during the last 13 years? It's simply how the global economic landscape has been since the GFC. Inflation will be tamed. This latest U-turn on the Growth Plan has put paid to that. Austerity 2.0 will be foisted upon the country, which will be music to the BoE's ears to bear down on inflation.

Ernst Young (https://www.ey.com/en_uk/news/2022/10/uk-economy-expected-to-be-in-recession-until-summer-2023) believe bank rate will now peak at 4% and I'm inclined to agree. Although it might stay at 4% for a good 12+ months.

TonyTeacake

lmitchell said:

TonyTeacake said:

lmitchell said:

TonyTeacake said:

lmitchell said:

TonyTeacake said:

I totally agree and in the long term interest rates will keep rising.

That's not necessarily true. Deflation is anticipated in the US next year, which will force the Fed to pivot mid-2023. Yes, energy prices are still going to play a part in the UK and Europe, but if core inflation begins to fall here and the remainder is intrinsically linked to energy, BoE is unlikely to penalise the taxpayer for this. I think we're looking at an interest rate environment of 3.00-4.00% for the next 10 years IMO. Still historically low, but a huge step up from the previous decade.

Yes this is key what you say "Deflation is anticipated in the US next year".

Now this is what they anticipate but I really can't see it happening. High inflation and high interest rates for the most of this decade.

Judging by your posting history, you've been insistent on this for a long, long time. This is not a forum for fantasy economics. It's important to be real about the picture. The era of free money is over - Covid has put paid to that - but a bank rate of 3%+ IS a high interest rate in the context of the LAST decade. A bank rate of 5-6% would cripple the government as well as the housing market, so unless you're a sadist I don't see why you would want that to happen to people. Hence why Hunt has done what he's done this morning.

I think you are the one who is living in a fantasy. Call me what you like but I saw this disaster coming from the beginning of the year and yes I have been insistent on how bad inflation will get and look where we are now, it is totally out of control and very damaging to the economy. BOE has been too late to act and many people are suffering through having to pay high prices for everything. Interest rates have been kept way too low for too long, all it has done is created a huge debt bubble. Go and do your research and just here in the UK personal debt is over 200 billion and this doesn't include mortgages, this is the highest it has ever been since records started since 1993. It's all a recipe for a disaster, I wish we weren't in this position but unfortunately it is the reality.

You also say "A bank rate of 5-6% would cripple the government as well as the housing market". 
Let me put it this way, if inflation is not tamed this will be a lot more damaging for everyone and it will be a lot worse than having a housing market crash because our economy will just collapse. Take a look around the world and you will see in countries where inflation has spiralled out of control their economies have collapsed.

There's no such thing as a debt 'bubble'. Did you expect people not to buy and borrow to live during the last 13 years? It's simply how the global economic landscape has been since the GFC. Inflation will be tamed. This latest U-turn on the Growth Plan has put paid to that. Austerity 2.0 will be foisted upon the country, which will be music to the BoE's ears to bear down on inflation.

Ernst Young (https://www.ey.com/en_uk/news/2022/10/uk-economy-expected-to-be-in-recession-until-summer-2023) believe bank rate will now peak at 4% and I'm inclined to agree. Although it might stay at 4% for a good 12+ months.

You saying there is no such thing as a debt bubble? That confirms it you are definitely on a different planet.

propertyhunter

We have large amounts of debt - but who owes it - the government. They'd ideally want a quick sharp recession to bring down demand, tame inflation and allow them to get to interest rates that are more favourable to their gargantuan debt burden. Remember we pay billions in interest on our national debt. The recession essentially needs to remove all of the money from the system that people are holding from furlough and saving during the pandemic, as well as all of the support schemes to offset energy price subsidies - increasing taxes will do this - it helps us to recover our debt and also reduce spending, which reduces inflation. 

wheldcj

But furlough money is ingrained in the economy.  This increased supply of money is fundamentally leaving the country into the wallets of oil companies, the countries that produce oil and the US money systems. Is is not stimulating and overheating our domestic economy so
interest rate increases are not going to help.

The recession that the government has now produced with their high tax, high inflation, high interest economy will be far from correctional or sharp.

Consumer spending will tank.  Some people will quickly be unable to afford the absolute essentials of eating, heating and living under a roof.  Most will simply stop spending on anything discretionary.  

All those restaurants, coffee shops, shops, UK hoteliers are going to fold due to reduced demand, increased energy and taxes.  All those businesses that rely on a dynamic economy suffer,  advertising, insurance, logistics, allied trades next.  Employment levels drop which will increase benefit spending by the government which increase our debt and sends the above spiral around again and again. 

Tories were absolutely correct to employ a growth strategy.  It was wrongly targeted and very badly delivered.  But this anti-growth strategy will be hopeless

ABFG

It's really all very difficult to predict given all the FUD at the moment. But given that the real issue of inflation is energy once the prices for energy stabilise, inflation will fall quite dramatically as it's measured YoY.

Given that in the UK we can import LNG and hence import supplies that the countries buying cheap Russian gas will no longer need, the effective step change in energy price (over a couple of years) will stop having an inflationary effect. We might end up with an advantage over countries without the facilities to import LNG. So a couple of years of high inflation and interest rates, but it will come down and so surely must interest rates as a response.