What chance a rates rise??

If there's no chance---Why ask?

Why do you think I asked???

attention seeker 1.01

saver 1000/1

If yesterdays GDP figures (+1.1%) are repeated next quarter, and inflation stays stubbonly high I'd say the chance of a rate rise before the years out is inevitable.
The fact that the MPC dicussed more QE at their last meeting, whilst the economy raced ahead, shows they are as clueless on the economy as they have been on inflation, one thing certain they will not be discussing QE at their next meeting, these GDP figures leave large dollops of egg on their faces.

a 1.1% is hardly racing ahead, given the low level that it is coming from. Auterity inevitably means that the growth can not be repeated.

In reality, although base rate is 0.5% the actual rate that consumers are paying is much higher. Margins on mortgages and loans are higher than thye have ever beeb!! Rates will have to fall before they can rise. The banks need to be cash rich before any upwards movement. LLoyds lack of competitive rates for mortgages and loans suggests that they are struggling with rubbish that they inherited from  HBOS .

a 1.1% is hardly racing ahead

it equates to 4.4% annulised, higher than was seen in the boom years, I'd call that racing ahead, what would you call it?




In reality, although base rate is 0.5% the actual rate that consumers are paying is much higher. Margins on mortgages and loans are higher than thye have ever beeb!!

You are over on the housing thread claiming the exact opposite, "never been a better time to have and pay a mortgage"

That's a different point to saying the margins are high, I believe.

I realise that, but then banks retail margins have little to do with the original question on BOE base rate rise, other than to muddy the waters.

Potlis

The rate that people pay is lower than ever before......If you have deposit /equity. The margin is irrelevant. My point really relates to the fact that base rate could increase, whilst margins fall! In reality therefore people may actually pay less in the future. this is particularly true of high loan to value mortgages!

Potlis, rates are going nowhere for some time. They are not expected to be above 2% until 2014!

UK interest rates to stay at record low 'until 2014'
The Bank of England lowered interest rates to 0.5% in March 2009 The Bank of England will have to keep interest rates at their record low of 0.5% until 2014, a leading economic forecaster has said.

The Ernst & Young Item Club said rates would need to be kept low to counter-balance the government's spending cuts.

"A base rate of 0.5% will begin to look like the new normal," Professor Peter Spencer from the Item Club said.

The Office for Budget Responsibility (OBR) has said that it expects rates to start to rise next year.

Interest rates have stood at 0.5% since March 2009.

"The new coalition's plans to cut the deficit are certainly ambitious," said Prof Spencer.

"On the assumption that the government is able to implement the overall reduction of £40bn set out in the Budget, we expect that UK growth will struggle to reach 1% this year but will gradually speed up in the following years to give the UK a high-quality recovery based on trade and investment."

The Item Club believes the Consumer Prices Index (CPI) measure of inflation will stay above the Bank of England's 2% target over the next 18 months, helped by high energy prices and increases in VAT.

But it says inflation will then fall "well below 2% as these effects wear off and spare capacity bears down on pricing decisions and wage bargaining".

"To prevent CPI inflation moving below 1% it will be necessary keep the Bank base rate low at 0.5% for much longer than the OBR and the

UK interest rates NOT to stay at record low 'until 2014'

Simon Ward, economist at Henderson New Star, has been saying for a while that the Bank has got it wrong on interest rates.

He agrees there is little chance of a move on rates in August but thinks a first increase could come as soon as November followed by another move in the spring of 2011.

'Next spring will be the crunch point. If we get through the VAT increase intact as I expect there will be a sharp increase in rates,' he says.

That is the problem with a wait and see approach.

If you leave it too late you have to do more than if you had taken smaller moves earlier.

chisel

I know why you asked. It is because your tiny mind can only compute simple linear thoughts irrespective of their accuracy. This is why every night you sit with your underpants on your head praying to a picture of Merve The Swerve and chanting your mantra of, "house prices cannot fall as long as interest rates stay low". My sadness is that you are likely to lead a lot of people into trouble for a very simple reason in that interest rates are something of a red herring in this discussion. If we get strong economic recovery then we will almost certainly get rising inflation and thus higher rates. This will quickly lead to lower house prices.

Alternatively we may slip back into recession. In this case unemployment will continue to rise, banks will be reluctant to lend, confidence will plummet and..........and.........AND. This will lead more slowly to lower house prices.

Your goose is cooked. Get down to Macdonald's while they are still hiring. Beat that rush buddy.

My point really relates to the fact that base rate could increase, whilst margins fall! In reality therefore people may actually pay less in the future. this is particularly true of high loan to value mortgages!
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Your belief in the generosity of banks is touching, but naive.
No way will banks absorb rate increases with lower margins, they are happy and safer doing less business at higher margins, any increase in base rates will be passed on, and margins maintained.

Potlis

That is definately the fear!!! But , will the government allow it?

There is going to be no massive increase in output. It is absolutley impossible given the cut backs, tax rises, job losses etc etc. everything is deflationary, and I am absolutely certain that next year will be tougher than this year!!

Deflation is a massive fear in 2012. If you strip out the vat increase inflation will be well below the 2% target

JML Joined: 10 May 05
Replies: 192 27 Jul 10 15:06   
UK interest rates NOT to stay at record low 'until 2014'

Simon Ward, economist at Henderson New Star, has been saying for a while that the Bank has got it wrong on interest rates.

JML , Simon Ward is wrong. The bank has not got it wrong, and if he thinks rates are going up any time soon and by large amounts he is deluded. Only last month they were discussing extending QE. This is like discussing a rate cut!

There's never been a better time to buy a Big Mac.

That is definately the fear!!! But , will the government allow it?
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Why wouldn't they allow it? this whole exercise has been about recapitalising the banks and increased profits are a major part of that, they will want to see those margins maintained as much as the banks would, after all, when rates rise, they can always use your own argument, that mortgages are still cheap, by traditional standards.

Mervyn King, governor of the Bank of England has warned that it will be some time before the Bank’s base rate returns to ’normal’ levels.



In a speech to the Treasury Committee today he says in the months ahead it may be that the Monetary Policy Committee judges that the inflation outlook warrants pushing down even harder or that it should ease back somewhat.

King says: “The debate is about the appropriate degree of stimulus, not about applying the brakes.

well said merv

I certainly didnt forsee any rise in rates for a long while, but with these statements about "2014" it would appear that a rise will be happening before too long.