Bank of England's base rate, will it fall?

lisyloo

That's obvious, even to a layman like me.

I would disagree that it's obvious. I believe it's incredibly complicated.

Roger Bootle is an eminent economist who has done a lot of research on the subject. Perhaps you would tell us your reasons before dismissing his 43 page report out of hand if you think he's got it wrong.

http://www.deloitte.com/dtt/article/0,1002,sid%253D2991%2526cid%253D82694,00.html

meanmachine_2

Let's just agree to disagree.

I base my opinions on listening to about 20 different economists (who all say different things) then making up my own mind.

It's as simple and complicated as that.

By the way, is this the same Roger Bootle who, in 2003, predicted a 20% slump in house prices for 2004?

Economists are nothing more than 21st century clairvoyants.

lisyloo

By the way, is this the same Roger Bootle who, in 2003, predicted a 20% slump in house prices for 2004?

It is the same person but I think you are quoting him incorrectly.
I believe it was 20% over a longer period with 7% falls in 2005.
I believe that capital economics have since revised that forecast to a smaller fall this year (although can't remember the exact figure).

I am happy to agree to diasgree about opinion over interest rates.

What I don't agree with is that - it's totally obvious to a layman - you also seem to be agreeing with me on that because you say that the 20 economists you listen to have different opinions.
If they can't agree (and they are more qualified than you and I) then how can it possibly be obvious?

dccarm

meanmachine wrote:

Economists are nothing more than 21st century clairvoyants.

meanmachine wrote:

I base my opinions on listening to about 20 different economists (who all say different things) then making up my own mind.

So you make up your mind on the basis of clairvoyants' opinions?

lisyloo

Just to add some recent facts.

In the latest BOE minutes 2 out of 9 members boted for a cut.
This does indicate a move away from rises towards cutting.

Also on Monday Sweden cut their base rate from 2.0% to 1.5%.
All eyes are not on the ECB to see if they follow suit.

I don't agree that we are totally tied to the $.
It is a consideration, but one of many that the BOE have to weigh up.

There is a risk of oil prices going skywards through.

meanmachine_2

lisyloo wrote:

Just to add some recent facts.

In the latest BOE minutes 2 out of 9 members boted for a cut.
This does indicate a move away from rises towards cutting.

Also on Monday Sweden cut their base rate from 2.0% to 1.5%.
All eyes are not on the ECB to see if they follow suit.

I don't agree that we are totally tied to the $.
It is a consideration, but one of many that the BOE have to weigh up.

There is a risk of oil prices going skywards through.

One of those "doves" has just quit, so it'll probably be back to an 8-1 split for next month.

Personally I'd keep my eye on the US and what they do more than Sweden. I wonder why?

If the US start cutting then I agree, our room for maneouvre increases. But just last week the governor was talking about the dangers of inflation, so the chances of a cut are remote, imo.

At least for now.

meanmachine_2

dccarm wrote:

So you make up your mind on the basis of clairvoyants' opinions?

No, read my post.

I said I make up my own mind....after listening to a range of opinions, including my family, my friends, the man in the pub etc etc. I ascribe equal weight to them all since economists are as unreliable as anyone.

Surely you do the same?

dccarm

meanmachine wrote:

No, read my post.

I said I make up my own mind....after listening to a range of opinions, including my family, my friends, the man in the pub etc etc. I ascribe equal weight to them all since economists are as unreliable as anyone.

Surely you do the same?

I did read your post - it's there for us all to see. That's why I quoted directly from it as I thought the contradiction was funny. It was intended in a light hearted manner.

As to my own system of predicting interest rates, I toss a coin. Heads they go up, tails they go down; it's as good a system as any I've found. Seriously though, I go on hunches based on the general mood around me in the property market and in the press etc. I'm taking a base rate mortgage as I don't expect them to go particularly far in either direction for the next year or two, although at the moment I'm leaning more towards a small drop rather than an increase.

lisyloo

Personally I'd keep my eye on the US and what they do more than Sweden. I wonder why?

Sweden is significant in the fact that it's possible that Europe could follow.
I hope you'd agree that Europe cutting rates is more significant than Sweden.

If the US start cutting then I agree, our room for maneouvre increases. But just last week the governor was talking about the dangers of inflation, so the chances of a cut are remote, imo.

You seem to believe that rate setting policy is US centric.
Whilst I accept there is a link, it does not figure as a huge section in the BOE MPC meeting minutes or their inflation report.
I personally think you are ovestating the link and not considering our significant links with Europe where rates are much lower.
And let's not forget the rest of the world. Places like China could have a massive effect on our economy.

I don't believe that rate setting policy hinges massively on one thing.
It's a balance of a number of factors bothe interbal to the UK and external.

But thanks for the debate.
I think we've demonstrated that it's impossible to get a clear view on this however much you stufy and read.

lisyloo

One of those "doves" has just quit

and the other one is the BOEs chief economist.

so it'll probably be back to an 8-1 split for next month

I can't see any basis for saying that.
Firstly it depends on who they are replaced with and secondly things change month to month anyway.