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

johnhenstock

Inflation will be back to 2% in a few months, I hipe they won’t keep rates unnecessarily high for too long.

MattMattMattUK

johnhenstock said:

Inflation will be back to 2% in a few months, I hipe they won’t keep rates unnecessarily high for too long.

There is zero chance that inflation will be down to 2% in a few months, that would require MoM inflation to fall to around -4%, massive MoM deflation. >5% rates are going to be here until at least 2025.

MattMattMattUK

VNX said:

The sentiment now seems to be now how high (5.5/5.75) but for how long they remain at these levels

seems like longer than first expected 

That is the problem with the BoEs slow and timid approach, it is why another 0.5% rise would have been better rather than the 0.25% we got. The BoE is now signalling they will stop at 5.75% later this year, it would have been better to set it at that level now.

Newbie_John

MattMattMattUK said:

johnhenstock said:

Inflation will be back to 2% in a few months, I hipe they won’t keep rates unnecessarily high for too long.

There is zero chance that inflation will be down to 2% in a few months, that would require MoM inflation to fall to around -4%, massive MoM deflation. >5% rates are going to be here until at least 2025.

The chances are definitely above 0% for sure. It's 7.3% now and it's going down, "a few" means 2-9, so if we take 9 months - it just need to drop 0.6% per month - and that's very likely - it dropped this much in the recent month.

johnhenstock

MattMattMattUK said:

johnhenstock said:

Inflation will be back to 2% in a few months, I hipe they won’t keep rates unnecessarily high for too long.

There is zero chance that inflation will be down to 2% in a few months, that would require MoM inflation to fall to around -4%, massive MoM deflation. >5% rates are going to be here until at least 2025.

Nonsense. Energy prices will plumet as some point and that will bring inflation down to almost nothing. Have a look at the latest chart, it’s literally a spike. We’re already on the way down and the slope is wuite steep.

it won’t take more than 6 months, that’s for sure.

the problem is the incompetent boe, who is always five steps behind, not reacting quickly. Basically we’ll have low inflation and relatively high interest rates.

CSI_Yorkshire

johnhenstock said:

MattMattMattUK said:

johnhenstock said:

Inflation will be back to 2% in a few months, I hipe they won’t keep rates unnecessarily high for too long.

There is zero chance that inflation will be down to 2% in a few months, that would require MoM inflation to fall to around -4%, massive MoM deflation. >5% rates are going to be here until at least 2025.

Energy prices will plumet as some point.

Really?

Where did you find this nugget of knowledge?

MattMattMattUK

Newbie_John said:

MattMattMattUK said:

johnhenstock said:

Inflation will be back to 2% in a few months, I hipe they won’t keep rates unnecessarily high for too long.

There is zero chance that inflation will be down to 2% in a few months, that would require MoM inflation to fall to around -4%, massive MoM deflation. >5% rates are going to be here until at least 2025.

The chances are definitely above 0% for sure. It's 7.3% now and it's going down, "a few" means 2-9, so if we take 9 months - it just need to drop 0.6% per month - and that's very likely - it dropped this much in the recent month.

You can already see how much inflation is baked in, even with your dragging "several months" out to mean nine months, that still leave three months we already have data for, which shows us that to get to 2% over a year we would still need at least one month, likely more, of deflation to reach 2%annual inflation in the next twelve months. 

johnhenstock said:

MattMattMattUK said:

johnhenstock said:

Inflation will be back to 2% in a few months, I hipe they won’t keep rates unnecessarily high for too long.

There is zero chance that inflation will be down to 2% in a few months, that would require MoM inflation to fall to around -4%, massive MoM deflation. >5% rates are going to be here until at least 2025.

Nonsense. Energy prices will plumet as some point and that will bring inflation down to almost nothing. Have a look at the latest chart, it’s literally a spike. We’re already on the way down and the slope is wuite steep.

it won’t take more than 6 months, that’s for sure.

the problem is the incompetent boe, who is always five steps behind, not reacting quickly. Basically we’ll have low inflation and relatively high interest rates.

Energy prices will not plummet, that statement shows a complete lack of understanding. The futures markets indicate flat through until at least the spring 2025, OPEC is cutting production to maintain prices, there is no way Russia will be allowed in from the cold and that means no significant price drops.

The "latest chart" is first a daft concept, there is no one universal chart, but if one looks at the data the rise was obvious, the downward fall from the initial peak was always expected, but everything else indicates flat pricing for at least the next two winters.

The BoE have been slow to react, the government have not reacted, preferring to let the BoE take the flack. However you are entirely wrong, next year we will have middling inflation and middling interest rates, in both around 5-6%, inflation is unlikely to hit 2% until mid 2025 unless the economy crashes fairly hard into recession and rates will not come down more than a few percent in the next few years.

johnhenstock

https://www.cliffordtalbot.co.uk/energy-prices/

Look here. Wholesale prices for gas and electric are back to pre-Ukraine levels, more or less. The reason we’ll still paying stupid high amounts is the price cap, which is based on historic prices.

there’s no reason why you couldn’t pay pre Ukraine war prices for your gas and electric other than the governments intervention through ofgem. A good system to prevent sudden increases, but a terrible system to allow the market to return to normal.

as they say, fuel prices go up like a rocket, but fall like a feather. We’re close to the feather reaching the ground.

CSI_Yorkshire

I don't think that graph shows what you think it does, and it doesn't support your point.

The wholesale component of the price cap dropped in the last update from £2170 to £1051 - i.e. it halved.
The electricity prices on your graph for the reference periods used for those caps changed from about 14p to about 12p.

Using that chart to conclude that the price cap is artificially keeping prices high is tenuous at best.

johnhenstock

CSI_Yorkshire said:

I don't think that graph shows what you think it does, and it doesn't support your point.

The wholesale component of the price cap dropped in the last update from £2170 to £1051 - i.e. it halved.
The electricity prices on your graph for the reference periods used for those caps changed from about 14p to about 12p.

Using that chart to conclude that the price cap is artificially keeping prices high is tenuous at best.

I know exactly what it shows.

It’s clearly showing gas and electricity prices being what they were at the end of 2021, towards the end of covid. Yes, energy prices were a bit higher than usual due to the increased demand as a result of the world coming out of lockdown, but still reasonable. Then it spiked in Feb 2022, following russia’s invasion of Ukraine, but it’s very obvious that prices are plumetting back to what they were, give or take.

I’m not saying the price cap is the only reason there are delays in the UK, but energy prices will plummet soon. It’s becoming increasingly difficult to justify selling something at record prices when the actual energy costs peanuts.