Interest rate decision tomorrow

[oyster]

There's now talk of a complete 100 basis pointas cut. Will they really do that?

[215cu]

Unlikely, I think they will opt for 50 now, 50 next month.

100 will send out all the wrong messages.

I imagine they really need confirmation that the inflation numbers are heading south with a clearer sign on the scope of the deflationary risk if they leave it too long.

[rich1231]

Without being a drama queen.. they have to do something epic and I cant imagine that the last few days have not included a discussion with the MPC to ensure that a drastic cut is made, this is not the time for small measures.

[Timmy35]

rich1231 said:

Without being a drama queen.. they have to do something epic and I cant imagine that the last few days have not included a discussion with the MPC to ensure that a drastic cut is made, this is not the time for small measures.

The BoE 'epic' it would be like my Granny doing a striptease. I think the shuffling-slightly-wee-smelling Old lady of Threadneedle Street with deliver a 50bp cut as expected.

[Mc Lovin]

shirly rate cutting now will just put of the inevitable then make it a st load worse?

[NoelWatson]

Mc Lovin said:

shirly rate cutting now will just put of the inevitable then make it a st load worse?

yes

[Asterix]

215cu said:

Unlikely, I think they will opt for 50 now, 50 next month.

100 will send out all the wrong messages.

I imagine they really need confirmation that the inflation numbers are heading south with a clearer sign on the scope of the deflationary risk if they leave it too long.

Agreed - although 100 could be the correct fiscal measure - it smacks of panic and they have to be seen to be in as much control as poss.

[Saied]

I bet on a 50bp cut. They will have to ease monetary policy, its looking like an economic armageddon (sp?) out there.

I've got 2 tracker mortgages. Will save me around £80 month if the Bank do go for the 0.5% reduction.

[rich1231]

Asterix said:

215cu said:

Unlikely, I think they will opt for 50 now, 50 next month.

100 will send out all the wrong messages.

I imagine they really need confirmation that the inflation numbers are heading south with a clearer sign on the scope of the deflationary risk if they leave it too long.

Agreed - although 100 could be the correct fiscal measure - it smacks of panic and they have to be seen to be in as much control as poss.

MFR collapse, retail collaps, spending stopped. WTF other signs do you want?

[Racing Rod]

Perhaps if they cut rates and therefore reduce the amount we pay to the banks in interest, it may force the buggers to lend to one another in order to keep their income levels constant.

[Asterix]

rich1231 said:

Asterix said:

215cu said:

Unlikely, I think they will opt for 50 now, 50 next month.

100 will send out all the wrong messages.

I imagine they really need confirmation that the inflation numbers are heading south with a clearer sign on the scope of the deflationary risk if they leave it too long.

Agreed - although 100 could be the correct fiscal measure - it smacks of panic and they have to be seen to be in as much control as poss.

MFR collapse, retail collaps, spending stopped. WTF other signs do you want?

I'm not disputing the signs/facts - just the appearance of some sort of control. There are lots of people that don't fully grasp what is happening and still, unfathomingly, have faith in government and the establishment to save them and take comfort in their actions.

[dilbert]

I wonder if it is feasible that the banks could raise more capital and alleviate their problems to some degree, by raising their interest rates. Perhaps it would be better for us if they did that, rather than being bailed out with taxpayers money.

I don't think it will make anything other than a political statement if BOE does reduce interest rates. I hardly see the banks following.

Edited by dilbert on Wednesday 8th October 10:44

[Dirty Boy]

We're all talking 0.5% and 1.0%, do you not think, perhaps 0.5% isn't quite enough at the moment, and perhaps 1.0% is headline stuff?

0.75%

It's needed to do something before Christmas. January sales will be epic.

[Dirty Boy]

dilbert said:

I hardly see the banks following.

True, only those on trackers will benefit.

[Benny Saltstein]

Saied said:

I bet on a 50bp cut. They will have to ease monetary policy, its looking like an economic armageddon (sp?) out there.

I've got 2 tracker mortgages. Will save me around £80 month if the Bank do go for the 0.5% reduction.

I'm in the same boat as you with a tracker. You're assuming your bank will pass on the rate cut. Look at the small print on your mortgage statement and you will probably see that the interest rate tracks not the Bank of England base rate but the Bank of Whatever base rate which usually mirrors the BoE rate but doesn't have to.

[215cu]

NoelWatson said:

Mc Lovin said:

shirly rate cutting now will just put of the inevitable then make it a st load worse?

yes

How?

It's unlikely to be fully passed on to all consumers unless you have a mortgage at a 'responsible' bank or according to product.

But wouldn't it make the banks debt numbers look less frightening in the medium term? Hopefully providing sufficient time to allow the banks in 'trouble' to re-capitalise at more favourable terms? If the government are taking a co-ordinated response then the amount of money on offer has to be tied to BoE action on interest rates?

The biggest danger isn't liquidity now, it's insolvency and an interest rate cut will certainly prevent that and provide a breathing space for firms to take remedial measures in terms of servicing & reducing debt and therefore rebuilding balance sheets?

Hopefully without too much collateral damage in terms of jobs and IVAs.

[rich1231]

Asterix said:

rich1231 said:

Asterix said:

215cu said:

Unlikely, I think they will opt for 50 now, 50 next month.

100 will send out all the wrong messages.

I imagine they really need confirmation that the inflation numbers are heading south with a clearer sign on the scope of the deflationary risk if they leave it too long.

Agreed - although 100 could be the correct fiscal measure - it smacks of panic and they have to be seen to be in as much control as poss.

MFR collapse, retail collaps, spending stopped. WTF other signs do you want?

I'm not disputing the signs/facts - just the appearance of some sort of control. There are lots of people that don't fully grasp what is happening and still, unfathomingly, have faith in government and the establishment to save them and take comfort in their actions.

So far we have had inaction or action too late to have any real effect. If that continues then we are reacting too late to avert any issues.

A big cut will be a stimulas to spending. And without being too "Abba" retail is getting mullered and sales are dropping everywhere. Oil has dropped and inflation will be on its way down from the peak. It will crash lower when unemployment is 2.5 million and no one is spending at all.

[scotal]

Dirty Boy said:

dilbert said:

I hardly see the banks following.

True, only those on trackers will benefit.

Immediately, but it will dpend on where LIBOR goes, where si 3month at the moment?

[Mc Lovin]

215cu said:

NoelWatson said:

Mc Lovin said:

shirly rate cutting now will just put of the inevitable then make it a st load worse?

yes

How?

It's unlikely to be fully passed on to all consumers unless you have a mortgage at a 'responsible' bank or according to product.

But wouldn't it make the banks debt numbers look less frightening in the medium term? Hopefully providing sufficient time to allow the banks in 'trouble' to re-capitalise at more favourable terms? If the government are taking a co-ordinated response then the amount of money on offer has to be tied to BoE action on interest rates?

The biggest danger isn't liquidity now, it's insolvency and an interest rate cut will certainly prevent that and provide a breathing space for firms to take remedial measures in terms of servicing & reducing debt and therefore rebuilding balance sheets?

Hopefully without too much collateral damage in terms of jobs and IVAs.

The same way its caused all the current problems, if the US hadn't cut rates to begin with, borrowing wouldn't have been so cheap, therefore we'd have not been in this situation. The same chancers who caused this problem, will be at it again as soon as the money becomes available, fk up again, then we bail them out again. yaay.

[dilbert]

anonymous said:

[redacted]

You mean he sticks his head in the sand, only to get his arse bitten off next month!