Reply to: MPC decision on interest rates tomorrow (General sub-thread)

[OwlHoot]

Quite shocking to note this is the first rise in almost a decade. ...

Not a bit. Back in 2009 I fully expected interest rates to be bumping along the bottom for years if not decades.

I also fully expect inflation to roar back into life at some point. So that liquidity you say you're so keen on acquiring may cause you a far worse shock!

[sasguru]

Must be great news for you. A million £ house with no mortgage and another £1M in the bank from the sale of your BTL empire. And now more interest to the wealthy. Hope you are celebrating the extra income...

Sadly the CGT on the BTLs means I got much less than a million
But my index linked funds are doing very nicely, thanks for asking.
Waiting for sale of main house to go through. Liquidität is the name of the game.

[jamesbrown]

Must be great news for you. A million £ house with no mortgage and another £1M in the bank from the sale of your BTL empire. And now more interest to the wealthy. Hope you are celebrating the extra income...

Is sas only a millionaire? I thought he was rich.

[DimPrawn]

Quite shocking to note this is the first rise in almost a decade.
There are people, many who have large mortgages, who have never budgeted for an interest rate rise
This should reduce consumer spending even more.

Must be great news for you. A million £ house with no mortgage and another £1M in the bank from the sale of your BTL empire. And now more interest to the wealthy. Hope you are celebrating the extra income...

[ladymuck]

A "hike" implies a sharp increase. Is it me or is 0.25% not really a "hike" but more of an uplift?

[Paddy]

Bank of England issues fresh warning about Brexit's impact on UK economy | The Independent

The Bank of England has issued a fresh set of warnings about the implications of Brexit, reiterating that the UK’s split from the European Union would likely hamper productivity and slow growth.

In its regular inflation report, published after announcing its first interest rate rise in over a decade, the central Bank struck a cautious tone and said that any future increases in rates would largely depend on the nature of Brexit.

“The decision to leave the European Union is having a noticeable impact on the economic outlook,” it said.

[BlasterBates]

Nobody applauded after they finished their meeting.

[SunnyInHades]

Interesting that upon today's rise announcement:
ftse100 has risen
the pound has fallen

probably due to 'Sell the fact' trading (traders buying on rumor of a rise then selling on the event).

[BR14]

Taken from Professional Adviser

CPI inflation rose to 3% in September and the UK economy grew by 0.4% in Q3, giving further reason for economists to increase the likelihood of a rate rise to 84%.
.

eek

[sasguru]

Quite shocking to note this is the first rise in almost a decade.
There are people, many who have large mortgages, who have never budgeted for an interest rate rise
This should reduce consumer spending even more.

[Martin@AS Financial]

Taken from Professional Adviser

The Bank of England's Monetary Policy Committee (MPC) has hiked interest rates from 0.25% to 0.5%, the first interest rate rise since July 2007.

The Bank of England showed seven members of the committee voted for a rise while just two members voted for rates to remain at 0.25%.

At the last meeting in September, only Ian McCafferty and Michael Saunders had voted for a rise.

The hike today is a reversal of the rate cut Bank of England governor Mark Carney implemented last year in the wake of the Brexit vote, which rocked markets and caused sterling to plummet.

This is the first time rates have been raised since July 2007, when they were raised by 0.25% from 5.5% to 5.75%.

However, as the global financial crisis began to unfold the BoE, then led by Mervyn King, rates began moving downwards and on 8 October 2008 central banks around the world cut rates in a coordinated move as the crisis peaked.

Since March 2009, rates have been at or under 0.5%.

Today's move had been widely predicted by the market and economists following more hawkish comments by governor Mark Carney in recent months as he hinted at hikes 'in the coming months'.

CPI inflation rose to 3% in September and the UK economy grew by 0.4% in Q3, giving further reason for economists to increase the likelihood of a rate rise to 84%.

However, speaking to the Treasury Select Committee in October, Carney ruled out raising rates for the sake of it in order to be able to reduce them if there was another recession.

"Building a war chest in interest rate terms for a potential future shock, is not staying on point in terms of the inflation target, nor is it appropriate or necessary given that policy can move quite nimbly if required," he said.

The next meeting will be held on 13 December.

[jamesbrown]

Bank rate up to 0.5%. Not surprising.

[Martin@AS Financial]

The general feeling is that we will see a 0.25% increase. Over the last couple of weeks, most banks have increased their mortgage rates slightly although they still remain at a historical low. It is difficult to predict however as this maybe due to lenders hitting their targets for the year. As such rates may well have gone up so that banks do not have surplus of cases over the Christmas period when they operate with scaled back staff levels.

[Mordac]

Tough call, but I suspect they will, for largely the wrong reason: credibility. They’ve telegraphed it very clearly and market expectations are around 90%. It’ll be one and done though, and that’s the commentary that most will be looking for. If they don’t, Sterling will tank, as it put on 2-3c USD when they first telegraphed their expectation. That’s another (better) reason that they’ll go ahead. There’s also some evidence of wage pressure starting to build, which is of greater concern to them than depreciation, as that’s largely pass-through.

WJBS.

[sasguru]

0.25% rise.
BofE caught between a rock and a hard place.
They've got to balance the large fall in consumer spending in the latest figures with the large growth in debt and the tanking of the pound.