Are we expecting BOE to remain at 4.75% on 8th February 2025?

MattMattMattUK

RelievedSheff said:

Hopefully the BOE see some sense and don't reduce rates again next month.

I agree that another rate cut next month would probably not be wise, but another one or two before the end of the year would probably be beneficial to the economy. 

RelievedSheff said:

There really wasnt any great need to be tinkering with rates yesterday!

Other than the huge increase in the cost of government borrowing negatively impacting all taxpayers, other than the huge amount of money now being sucked out of the real economy in the form of debt interest, other than the increased cost of investing in business reducing growth, other than the increased cost of mortgages negatively impacting both lifestyle and wider spending, you mean none of those matter? Only keeping rates at the current levels so savers get a little bit more interest on money they are unwilling to invest?

lojo1000

MobileSaver said:

lojo1000 said:

Hoenir said:

lojo1000 said:

Hoenir said:

lojo1000 said:

Woshi said:

BarelySentientAI said:

Johnny-Cage said:

BarelySentientAI said:

Woshi said:

Great news, hopefully more drops on the horizon.

Why?

What is 'bad' about where the base rate is now, and what 'great' thing would happen if it dropped further?

Is this just "I want my mortgage payment to be smaller"?

Take it you’re mortgage free 

No, but I don't believe that my personal circumstances determine what is "great news" for the economy or otherwise.

You’re on the mortgage and endowments section of the forum, in what world would higher mortgage rates (with increased risk of negative equity) be good news for those currently indebted?

If central banks continue to 'save the world' by cutting rates (rather than allowing the economy and prices to adjust) and destroy productivity (which they've done since 2008) then they will continue to make the currency worth less and conversely asset prices cost more - this is inflation. 

Didn't destroy productivity. The GFC was a boom funded by debt. That debt still exists. 

Why do you think productivity went down since 2008? Why 2008 and what debt are you talking about?

Um........ You are aware of the banking crisis. The near collapse of the entire UK banking system one weekend in October 2008. The necessity for QE and other liquidity support packages. Or was it just a dream. Everything was instantly fixed. 

It is also the collusion of policy between central banks and govts to promote mortgage debt to keep money supply expanding and home prices rising.

So your assertion is that it's all a big conspiracy even though we have an entirely different government today than we did a month ago? And it's all about keeping house prices high? Now where did I leave my tin foil hat...

I believe central banks do not want house prices to fall. I believe govts do not want house prices to fall. I believe each knows neither wants house prices to fall. I believe that there is no explicit agreement between the 2 parties to stop house prices falling.

These 2 parties are tasked with enabling a strong economy. The only way this occurs is the money supply expanding.

If house prices fall, the money supply will not expand, ergo, both parties will formulate policies to increase mortgage debt.

lojo1000

MattMattMattUK said:

RelievedSheff said:

There really wasnt any great need to be tinkering with rates yesterday!

Other than the huge increase in the cost of government borrowing negatively impacting all taxpayers, other than the huge amount of money now being sucked out of the real economy in the form of debt interest, other than the increased cost of investing in business reducing growth, other than the increased cost of mortgages negatively impacting both lifestyle and wider spending, you mean none of those matter? Only keeping rates at the current levels so savers get a little bit more interest on money they are unwilling to invest?

Debt is ever expanding in order to create monetary demand. If it doesn't continue to expand, growth cannot occur (unless heaven forbid you encourage productivity as an economic policy).

The reason central banks cut rates to an ever lower level with each business cycle was the need to cut the interest burden enough that debt could be increased to a higher level.

Eventually rates were cut to zero.

So the next step was central banks needed to print money and buy govt debt because there was no-one left in the "real economy" to buy all the extra debt.

Cutting rates just enables the magic to continue.

We reached 5% rates because govts increased deficits the same time as central banks were buying debt hence there was too much money flowing too quickly into consumption demand.

But the end game has to be greater and greater money printing in order to keep it all moving. Unless people are willing to accept negative growth, the debt never gets repaid (despite what some on here think), the debt always ends up getting transferred to the govt balance sheet as they pick up the cost of each recession.

Trying to control the money supply is not a positive economic policy.

Leave rates where they are. Let markets price yield, credit and labour.

Hoenir

RelievedSheff said:

Hopefully the BOE see some sense and don't reduce rates again next month.

There really wasnt any great need to be tinkering with rates yesterday!

Inflation has fallen. No need for interest rates to be repressive. Borrowing remains significantly more expensive than for well over a decade previously. QT continues to chug quietly away in the background. Deleveraging continues across the piste. 

lojo1000

Hoenir said:

RelievedSheff said:

Hopefully the BOE see some sense and don't reduce rates again next month.

There really wasnt any great need to be tinkering with rates yesterday!

Inflation has fallen. No need for interest rates to be repressive. Borrowing remains significantly more expensive than for well over a decade previously. QT continues to chug quietly away in the background. Deleveraging continues across the piste. 

Interest rates are not "repressive". It's the level of debt versus capacity of the economy which is repressive.

lojo1000

You don't need to be a rocket scientist this morning to work out how fast the markets think this economy is now decelerating. Yields down, commodities up but equities continue to get hit.

ReadySteadyPop

RelievedSheff said:

Hopefully the BOE see some sense and don't reduce rates again next month.

There really wasnt any great need to be tinkering with rates yesterday!

Considering the market sell off today and the fact that recession warnings are flashing bright red again all of a sudden, and the term "hard landing" is back on the agenda I would say that they timed it perfectly.

MattMattMattUK

The economy is a mess and in the short term there is little the government could reasonably do, any measures the government can take would likely be inflationary, kicking the can down the road a few months, or both. The BoE lowering interest rates gradually is a good thing, down to a level in line with the inflation target. 

Pushing us into deflationary territory will be bad, equally holding rates too high for the economy. Paying interest is pretty bad all round, it is an overall negative and especially the increase in the costs of state borrowing. I know there are certain users who agitate for higher interest rates because of either poor understanding of economics or personal gain, but thankfully they are not in positions of power.

BarelySentientAI

MattMattMattUK said:

The BoE lowering interest rates gradually is a good thing, down to a level in line with the inflation target. 

What number is "in line with the inflation target"?  You can't be meaning that it needs 2% base rate to hit 2% inflation, because we all know that's nonsense.  After all, we've had 2% inflation with rates at various points between 0.25% and 7.5% that I know of.

MattMattMattUK said:

Paying interest is pretty bad all round, it is an overall negative and especially the increase in the costs of state borrowing. I know there are certain users who agitate for higher interest rates because of either poor understanding of economics or personal gain, but thankfully they are not in positions of power.

So your suggestion would be that near-zero rates are the best alternatives?  Or completely zero?  If interest is bad all round, then the best economic policy would be to have the lowest possible interest rate at all times?  Race for the biggest pile of cheap debt possible?

State borrowing - and all borrowing for that matter - gets more expensive based on the interest rate and the amount of capital.  Rather than "cut, cut, cut" on rates to reduce the burden, how about not pushing policies that treat increasing debt capital as some sort of panacea?

Hoenir

BarelySentientAI said:

MattMattMattUK said:

The BoE lowering interest rates gradually is a good thing, down to a level in line with the inflation target. 

What number is "in line with the inflation target"?  You can't be meaning that it needs 2% base rate to hit 2% inflation, because we all know that's nonsense.  After all, we've had 2% inflation with rates at various points between 0.25% and 7.5% that I know of.

The  BOE's objective is to ultimately have base rate in the region of 1% above a stable level of inflation.