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

lojo1000

Looking ahead to 2025 and beyond, there could be a negative scenario emerging and being 'sniffed-out' by the markets now.

Today showed weaker employment data for the UK. Whilst still strong, as borne out by hot wage inflation well above CPI, the employment market is weakening - jobs are becoming less secure. 

With budget deficits already long-term unsustainable (UK:-4.2% of GDP) with a strong employment market, there is a right to be concerned about what economic policy will need to be if inflation does not fall to target - and remain at target.

If business confidence falls and they begin to reduce supply/not invest, they will turn instead to trying to raise prices, employment will fall, budget deficits will expand and that puts pressure on bond yields to go higher - both long term and short term as central banks remain under pressure to contain inflation.

Poor relations with China and anti-competitive practices between all the major trading blocks will continue to emerge as countries try and retain whatever advantage they believe they have.

Stagflation may be coming back. Weak economies will lose control of their currencies unless they keep rates high enough to attract capital flows.

Maka344

lojo1000 said:

Looking ahead to 2025 and beyond, there could be a negative scenario emerging and being 'sniffed-out' by the markets now.

Today showed weaker employment data for the UK. Whilst still strong, as borne out by hot wage inflation well above CPI, the employment market is weakening - jobs are becoming less secure. 

With budget deficits already long-term unsustainable (UK:-4.2% of GDP) with a strong employment market, there is a right to be concerned about what economic policy will need to be if inflation does not fall to target - and remain at target.

If business confidence falls and they begin to reduce supply/not invest, they will turn instead to trying to raise prices, employment will fall, budget deficits will expand and that puts pressure on bond yields to go higher - both long term and short term as central banks remain under pressure to contain inflation.

Poor relations with China and anti-competitive practices between all the major trading blocks will continue to emerge as countries try and retain whatever advantage they believe they have.

Stagflation may be coming back. Weak economies will lose control of their currencies unless they keep rates high enough to attract capital flows.

Great analysis, what could this mean for base rates and swap rates/mortgages?

ReadySteadyPop

Maka344 said:

lojo1000 said:

Looking ahead to 2025 and beyond, there could be a negative scenario emerging and being 'sniffed-out' by the markets now.

Today showed weaker employment data for the UK. Whilst still strong, as borne out by hot wage inflation well above CPI, the employment market is weakening - jobs are becoming less secure. 

With budget deficits already long-term unsustainable (UK:-4.2% of GDP) with a strong employment market, there is a right to be concerned about what economic policy will need to be if inflation does not fall to target - and remain at target.

If business confidence falls and they begin to reduce supply/not invest, they will turn instead to trying to raise prices, employment will fall, budget deficits will expand and that puts pressure on bond yields to go higher - both long term and short term as central banks remain under pressure to contain inflation.

Poor relations with China and anti-competitive practices between all the major trading blocks will continue to emerge as countries try and retain whatever advantage they believe they have.

Stagflation may be coming back. Weak economies will lose control of their currencies unless they keep rates high enough to attract capital flows.

Great analysis, what could this mean for base rates and swap rates/mortgages?

They will go higher. This is a very bad time in history to have high debt levels.

MeteredOut

ReadySteadyPop said:

Maka344 said:

lojo1000 said:

Looking ahead to 2025 and beyond, there could be a negative scenario emerging and being 'sniffed-out' by the markets now.

Today showed weaker employment data for the UK. Whilst still strong, as borne out by hot wage inflation well above CPI, the employment market is weakening - jobs are becoming less secure. 

With budget deficits already long-term unsustainable (UK:-4.2% of GDP) with a strong employment market, there is a right to be concerned about what economic policy will need to be if inflation does not fall to target - and remain at target.

If business confidence falls and they begin to reduce supply/not invest, they will turn instead to trying to raise prices, employment will fall, budget deficits will expand and that puts pressure on bond yields to go higher - both long term and short term as central banks remain under pressure to contain inflation.

Poor relations with China and anti-competitive practices between all the major trading blocks will continue to emerge as countries try and retain whatever advantage they believe they have.

Stagflation may be coming back. Weak economies will lose control of their currencies unless they keep rates high enough to attract capital flows.

Great analysis, what could this mean for base rates and swap rates/mortgages?

They will go higher. This is a very bad time in history to have high debt levels.

This thinking is not flowing through to savings/ISAs, where most of the providers are in the process of closing products and replacing them with similar offerings with lower rates. This is including 1 and 2 year fixes.

Hoenir

Are we expecting BOE to remain at 5.25% on 9th May 2024?

I've no read anything to say that it was likely in the past six months. In fact the likelihood of rate reductions globally are suggesting fewer and later. Perhaps a return to normal levels of base rate was actually pretty seamless. The pages of social media speculation were just that speculation. 

MeteredOut

Hoenir said:

Are we expecting BOE to remain at 5.25% on 9th May 2024?

I've no read anything to say that it was likely in the past six months. In fact the likelihood of rate reductions globally are suggesting fewer and later. Perhaps a return to normal levels of base rate was actually pretty seamless. The pages of social media speculation were just that speculation. 

They weren't just media speculation - they were also based on bond futures.

ReadySteadyPop

MeteredOut said:

ReadySteadyPop said:

Maka344 said:

lojo1000 said:

Looking ahead to 2025 and beyond, there could be a negative scenario emerging and being 'sniffed-out' by the markets now.

Today showed weaker employment data for the UK. Whilst still strong, as borne out by hot wage inflation well above CPI, the employment market is weakening - jobs are becoming less secure. 

With budget deficits already long-term unsustainable (UK:-4.2% of GDP) with a strong employment market, there is a right to be concerned about what economic policy will need to be if inflation does not fall to target - and remain at target.

If business confidence falls and they begin to reduce supply/not invest, they will turn instead to trying to raise prices, employment will fall, budget deficits will expand and that puts pressure on bond yields to go higher - both long term and short term as central banks remain under pressure to contain inflation.

Poor relations with China and anti-competitive practices between all the major trading blocks will continue to emerge as countries try and retain whatever advantage they believe they have.

Stagflation may be coming back. Weak economies will lose control of their currencies unless they keep rates high enough to attract capital flows.

Great analysis, what could this mean for base rates and swap rates/mortgages?

They will go higher. This is a very bad time in history to have high debt levels.

This thinking is not flowing through to savings/ISAs, where most of the providers are in the process of closing products and replacing them with similar offerings with lower rates. This is including 1 and 2 year fixes.

That can change overnight, the key is not to have too much debt.

Maka344

Deutsche Bank's economists have retreated from their long-held May rate cut. "We now shift the starting date for rate cuts to June," they said, adding that they "still see the MPC delivering three quarter point rate cuts this year (June, Sep, Dec).

"But we now expect the MPC to deliver only four rate cuts next year (Feb, May, Aug, Nov), sticking to a quarterly pace through 2025 (previously, we saw six rate cuts in 2025). We expect two further rate cuts in H1-26 taking the terminal rate to 3%."

MeteredOut

ReadySteadyPop said:

MeteredOut said:

ReadySteadyPop said:

Maka344 said:

lojo1000 said:

Looking ahead to 2025 and beyond, there could be a negative scenario emerging and being 'sniffed-out' by the markets now.

Today showed weaker employment data for the UK. Whilst still strong, as borne out by hot wage inflation well above CPI, the employment market is weakening - jobs are becoming less secure. 

With budget deficits already long-term unsustainable (UK:-4.2% of GDP) with a strong employment market, there is a right to be concerned about what economic policy will need to be if inflation does not fall to target - and remain at target.

If business confidence falls and they begin to reduce supply/not invest, they will turn instead to trying to raise prices, employment will fall, budget deficits will expand and that puts pressure on bond yields to go higher - both long term and short term as central banks remain under pressure to contain inflation.

Poor relations with China and anti-competitive practices between all the major trading blocks will continue to emerge as countries try and retain whatever advantage they believe they have.

Stagflation may be coming back. Weak economies will lose control of their currencies unless they keep rates high enough to attract capital flows.

Great analysis, what could this mean for base rates and swap rates/mortgages?

They will go higher. This is a very bad time in history to have high debt levels.

This thinking is not flowing through to savings/ISAs, where most of the providers are in the process of closing products and replacing them with similar offerings with lower rates. This is including 1 and 2 year fixes.

That can change overnight, the key is not to have too much debt.

Did it change overnight?

ReadySteadyPop

Maka344 said:

Deutsche Bank's economists have retreated from their long-held May rate cut. "We now shift the starting date for rate cuts to June," they said, adding that they "still see the MPC delivering three quarter point rate cuts this year (June, Sep, Dec).

"But we now expect the MPC to deliver only four rate cuts next year (Feb, May, Aug, Nov), sticking to a quarterly pace through 2025 (previously, we saw six rate cuts in 2025). We expect two further rate cuts in H1-26 taking the terminal rate to 3%."

Might as well just make it up, they can`t predict where rates will be in the future.