Reply to: Stop the world!! The US raises interest rates!

[jamesbrown]

GBP is tanking (1.487 now) - excellent news for expoters

Yep, it's like a mini boom every day

[AtW]

GBP is tanking (1.487 now) - excellent news for expoters

[Zero Liability]

This lot is likely to agree... for now.

[MrMarkyMark]

Interest rate rise means all is fine. Financial crisis averted. We are saved.

I never knew what all the fuss was about.

Saved

[scooterscot]

[Cirrus]

Take Comfort - Always Somebody Worse Off Than You

Great news.

I'd recently moved most of my cash into a SIPP, so I won't get the benefit of any interest rises and my SIPP had already lost £4000 before yesterday's news. I daren't look now.

[AtW]

FTFY

FOOK!

DOOMED!!!!

[Zero Liability]

Token?

US Fed rates go up 100%!!!!

FTFY

[AtW]

Which of these statements are true:


Banks to immediately pass on rise to their mortgage holders.

Banks to immediately pass on rise to their savers.

Neither.

Correct one is - Bankers to immediately increase their own bonuses.

HTH

[AtW]

Just means they'll target a range between 0.25 and 0.5%. Doesn't mean they'll actually hit it. Token increase, though.

Token?

US Fed rates go up 50%!!!!

[Zero Liability]

If they still needed deposits to extend credit, they might have had an incentive to push up rates, but they really don't need them that much anymore, with central banks to provide the 'reserves'. So there is very limited incentive to increase rates paid on savings accounts.

This is an interesting point and definitely something to watch. Target is the keyword. It makes sense that they can do this by increasing the overnight reverse repo and interest on excess reserves, but who really knows. For one, this is transmitted through traditional banks that park their money with the Fed. The issue is that QE has scuppered the traditional mechanisms and, even with the old mechanisms, there were bumps in transmission (especially during the crisis).

Yup, although I would hesitate to use the word "market" in conjunction with anything the Fed does, it is essentially a very opaque auction process. Targeting a range between 0.25 and 0.5% is hardly going to give them much leeway when another "liquidity crisis" hits, so we'll no doubt see Japan style QE if and when that happens.

[jamesbrown]

Yeah, all banks immediately increased their prime rates but left deposit rates untouched Awash with cash.

[SueEllen]

Which of these statements are true:


Banks to immediately pass on full rise to their mortgage holders.

Banks to immediately pass on full rise to their savers.

I think you find...

[jamesbrown]

Just means they'll target a range between 0.25 and 0.5%. Doesn't mean they'll actually hit it. Token increase, though.

This is an interesting point and definitely something to watch. Target is the keyword. It makes sense that they can do this by increasing the overnight reverse repo and interest on excess reserves, but who really knows. For one, this is transmitted through traditional banks that park their money with the Fed. The issue is that QE has scuppered the traditional mechanisms and, even with the old mechanisms, there were bumps in transmission (especially during the crisis).

[tomtomagain]

Which of these statements are true:


Banks to immediately pass on rise to their mortgage holders.

Banks to immediately pass on rise to their savers.