Interest Rates - BoE should cut them or the governer should go!

SuperV

"British banks face £390bn 'funding gap'"

"Banks must raise about £390bn in new debt in 2011, or more than £30bn every month just to replace their existing funding as they are hit by a combination of maturing bonds and the closure of major Government-guaranteed financing schemes."

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7901326/British-banks-face-390bn-funding-gap.html

"China rating agency condemns rivals"

http://www.ft.com/cms/s/0/5632a0b8-94b7-11df-b90e-00144feab49a.html

"There is also a view among many investors that the agencies would shy away from withdrawing triple A ratings to countries such as the US and UK because of the political pressure that would bear down on them in the event of such actions."

"The results were very different from those published by Moody’s, Standard & Poor’s and Fitch, with China ranking higher than the United States, Britain, Japan, France and most other major economies, reflecting Dagong’s belief that China is more politically and economically stable than all of these countries."

“The US is insolvent and faces bankruptcy as a pure debtor nation but the rating agencies still give it high rankings ,” Mr Guan said. “Actually, the huge military expenditure of the US is not created by themselves but comes from borrowed money, which is not sustainable.”

The mortgage interest rates will go up and up and up. Probably a very good moment to get fixed rate, if a good deal exists.

SuperV

http://www.independent.co.uk/news/business/news/economy-set-for-triple-whammy-admits-bank-chief-2032213.html

"We know the evils of inflation. It adds to uncertainty, it destroys value of hard-earned cash and reduces the efficiency of the economy. We have to be incredibly vigilant."

Problem is that the biggest share of wealth is not hard earned but received as a gift due to a huge house price inflation.

The same story again, those that have it wants to keep it (doesn't matter they didn't really earned it), those that don't have it want to get something.

I believe that unless there is a huge investment is earning capacities in wealth making professions (that means excluding finance, legal and military - professions maintaining existing status) the debt will catch up with sterling and the UK, inflation will increase - 5 to 7%, maybe more.

SuperV

http://www.telegraph.co.uk/finance/economics/7925564/Interest-rates-will-go-up-quicker-than-anyone-expects-ex-Bank-of-England-officials-warn.html

'Interest rates will have to rise earlier and more sharply than expected to keep inflation under control, two former Bank of England policy-makers have warned.'

Boa21

SuperV wrote: »

http://www.telegraph.co.uk/finance/economics/7925564/Interest-rates-will-go-up-quicker-than-anyone-expects-ex-Bank-of-England-officials-warn.html

'Interest rates will have to rise earlier and more sharply than expected to keep inflation under control, two former Bank of England policy-makers have warned.'

He's expecting a recovery is he - not once the torycrats slash and burn polices start to take effect. For a start off, loads of public sector workers heading for the dole queue, followed by the construction workers who won't be building the new schools etc. :eek:

SuperV

"In an interview with The Daily Telegraph, Paul Fisher, the executive director of markets and a member of the rate-setting Monetary Policy Committee (MPC), said central bank policymakers would like rates to increase as much as tenfold from their current historic low of 0.5pc as soon as possible.

“We hope people are aware that interest rates at some point will go up again and that they will head back to a normalised position,” he said. Confirming that “normalised” rates would be “around” 5pc, he added: “What we need to do is to trigger the mindset in people that that’s where rates will eventually go back to.”

His comments came as minutes from this month’s MPC meeting suggested that policymakers are already considering rate rises to stave off the risk of soaring inflation. “Most of those members considered that the accumulation of news over recent months had probably shifted the balance of risks to inflation in the medium term upwards,” the minutes noted.

Market expectations have also jumped in the past month, with rates in two years’ time now forecast to be 2pc rather than the 1.5pc being predicted in November.

Mr Fisher’s warning follows a stark Bank research paper indicating that more than 7m homeowners are at risk of rate rises. Two thirds of mortgage borrowers are currently on variable rates, it found, compared with roughly half in a typical year. On current wages, if rates were at 5pc, households would be spending more of their disposable income on debt interest than at any time in the past 20 years, the Bank’s analysis showed.

"

http://www.telegraph.co.uk/finance/economics/8220862/Homeowners-should-prepare-for-interest-rates-of-5pc-warns-Bank-of-England-markets-chief-Paul-Fisher.html