Rates cuts are coming! It's June 25, 2003

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I have been fortunate to have paid off my mortgage early (with a lot of hard effort) and it is considered a starter home in my local market, but I am grateful not to have had the mindset of those around me as you have described. I have visited a number of those homes in the nicer neighborhoods near me and when we drive up the landscaping looks to be professionally kept, two brand new SUV's (probably leased) and impressive sized homes, but once we enter the door there is minimal furntiture and even at that it looks like something out of a college dorm room. It reminds me of the Hollywood cowboy sets of a western town. On film it looks like an authentic western town, but if you looked behind the walls you would see it is all fake and only the front looks to be real. Many of these couples try to create this false front that when you drive up it looks really impressive, but we you find out about them you realize they really have nothing. What they own is kitchen utensils, clothes and a scant amount of college dorm room furniture. Some of them have nice furniture, but usually that is on some kind of payment plan as well. When I was working hard to become debt free I was predicting a day when all these people would have a great fall and now the day is here. Not that I hoped that would happen for them, but it was easy to predict if the economy turned down a little.

But here is the bad thing. They have not only hurt themselves, but they have hurt the rest of us as well. I am debt free and though I am grateful I am at risk as well now because it is impacting our economy in a general manner. Luckily with being debt free my stress levels are still low, but I am watching with concern.

I hear you, Felt.

If it's any consolation, over here, we now have the same situation that you have. "don't worry - so long as people continue to spend on (please select any/all of the following..clothes/cars/holidays/gadgets/houses), the economy will be fine"
It would be fine if the people spending were doing so - from their disposable income.
The fact is that they're not - they're spending on their credit cards or they're borrowing money to spend or they're spending money earned from overtime.
In other words, if the credit card gets maxxed, if the loan isn't repaid or if the overtime dries up or if they lose their jobs, then what will people do?

Debt and people getting in to debt, is growing here all the time.
They want to have all the material items now, today - they're not prepared to save.

Personally I don't know why people feel the need to spend as they do.
Do they feel inadequate if they don't have the latest fashion/gizmo????

Personally I don't know why people feel the need to spend as they do.
Do they feel inadequate if they don't have the latest fashion/gizmo????[/QUOTE]

Barbie doll!

Personally I don't know why people feel the need to spend as they do.
Do they feel inadequate if they don't have the latest fashion/gizmo????

Barbie doll![/QUOTE]

needs must!

November 07 Bank of England announces : no change in interest rates.

Again.



.........and the Bank of England too, has keep interest rates unchanged after their monthly meeting today.

Nice!




http://www.ireland.com/newspaper/breaking/2007/1004/breaking58.htm



Last Updated: 04/10/2007 12:54
No change for UK interest rates

The Bank of England kept official interest rates steady for a third month running today, but many people expect it will cut them later this year as a credit crunch in global markets starts hitting the wider economy.

Analysts had predicted the BoE's Monetary Policy Committee would keep borrowing costs at 5.75 per cent. Policy makers have said they need time to see what effect recent market turmoil has on economic growth and inflation.
The BoE offered no statement to accompany its widely expected decision but sterling rose and interest rate futures fell as there had been some nervousness the BoE could make a surprise cut.

A few months ago many economists had predicted a further rate rise this year following five since August 2006. But this was before the global cash crunch which prompted a run on British mortgage bank Northern Rock last month.

There are worries that this will soon spill over into tighter lending conditions on companies and consumers, slowing the economy as a result.
There are already signs that Britain's housing market is cooling. Mortgage lender Halifax said house prices fell 0.6 per cent last month, the first decline since December.

The BoE has said it will watch credit conditions closely and many economists believe rates have now peaked and could come down as soon as November. But the economy is still firing on all cylinders and price pressures have not abated

Lim: Never look into the rear view mirror for future course changes and we're all in this global financial mess together. Money center banks know no borders anymore, nor do Swiss or Cayman secrecy rules. The future of residential real estate is a pain cave. Deflation is the next shoe to drop.

Inflation is something to worry about in a full employment wonderland. Going forward, England & Europe will have unemployment issues and deflation.


Hilarious re-reading the above tripe.

Couldn't have got it more wrong.




All central bankers will meet secretly and hold hands. Rate cutting will be measured and uniform, but the direction will be straight downward. Everyone will climb on board.

Wrong.
Wrong when this tripe was posted in August and still wrong today three months later.

The only one cutting rates is the Fed - cause it's got no other choice.
ECB and Bank of England did maintain rates at the same level since August and they will maintain rates to ward of inflation.

"Rate cutting will be measured and uniform" : priceless.





Just as I predicted the ubiquitous nature of doping in pro cycling, I have now correctly telegraphed the global recession of 2008-2009.

The good news for SUV owners is that the blood-for-oil program will result in lower prices at the pump and heating oil for those trapped in a Winter chill.


.........................comical.

Crude prices hitting nearly $100.00 a barrel today.

The one thing that you did manage to get right in all of this...................it will be a cold winter........but only because people won't be able to afford to buy oil and not due to the waffle you posted.

8th November 2007 :
European Central Bank has........held interest rates steady once again.


http://www.ft.com/cms/s/0/aec05cd8-8de5-11dc-8591-0000779fd2ac.html?nclick_check=1

The European Central Bank has left its main interest rate unchanged at 4 per cent as global financial turmoil restricts its room for manoeuvre.

The decision by its governing council meeting in Frankfurt was expected but came despite eurozone inflation leaping last month to 2.6 per cent on the back of higher oil and food prices.

The euro’s rise this week to a new record of more than $1.47 against the dollar is likely to have been seen by at least some ECB governing council members as having done the ECB’s work in braking the 13-country eurozone economy.

The ECB will also have been wary about disrupting further already volatile financial markets – a fear which may result in Jean-Claude Trichet, ECB president, being more circumspect than normal when he holds a press conference this afternoon.
Economic confidence indicators have pointed to a significant slowdown after a strong third quarter of growth, while the global credit squeeze has already pushed up financing costs for business.
The ECB aims to keep eurozone inflation “below but close” to 2 per cent.

Mr Trichet’s comments will be monitored closely by financial markets, which are looking for a guide on how serious the ECB remains about pressing ahead with further interest rate rises. A crucial factor is likely to be the ECB’s view on likely inflation developments in 2008.
Since December 2005, the ECB has raised its main interest rate eight times by a quarter percentage point – most recently in June this year.

more commentary from the ECB spokeman today, 8th November 2007 :

European Central Bank President Jean-Claude Trichet said today that 'brutal' exchange rate moves were never good for the world economy, as the dollar teetered close to all-time lows against the euro again.

'I have said already, brutal moves are never welcome,' Trichet told a news conference after the ECB left interest rates on hold at 4% for the fifth month running.

The euro has hit record highs against the dollar and major trading currencies as traders exploit the narrowing interest rate gap with the US and concerns about US growth in the wake of the subprime mortgage crisis.

In January 2004, Trichet used the word 'brutal' to describe a sharp rise in the euro, then at record highs of $1.2898.

The ECB chief said today that he had seen 'sharp and abrupt' moves in exchange rates, adding that the Group of Seven finance ministers' position on the undesirability of disorderly movements was true more than ever.

He also emphasised the US government's stated position that it is in favour of a strong dollar.

Trichet also said today that there were continued inflationary risks in the 13-nation euro zone but hinted there would be no interest rate hike next month.
'The outlook for price stability over the medium term is subject to upside risks,' he said.
But he added that 'the economic fundamentals of the euro area remain sound and support a favourable medium-term outlook for economic activity.'
And, in what was seen as a hint that the bank would probably not hike the rate next month either, Trichet did not say the ECB was exercising 'strong vigilance' over inflation, which he has said in the past to signal an imminent hike.

The ECB also left its marginal lending rate, at which banks can get emergency overnight loans, unchanged at 5% and the deposit rate stayed at 3%.
Earlier, the Bank of England kept its key interest rate at 5.75% for a fourth month running, as expected, as policymakers sat tight amid rising concerns over the global credit squeeze.

Market Preview: ECB fears inflation more than slowdown
By Neil Dennis

Published: December 2 2007 16:37 | Last updated: December 2 2007 16:37

Investors discover this week whether turbulent trading conditions and tight money markets have influenced the interest rate-setting committees of both the Bank of England and the European Central Bank.

Jean-Claude Trichet and his fellow governing council members at the ECB will continue to be more concerned about inflation when they meet on Thursday. Consumer price data last week showed the eurozone consumer prices index rose to 3 per cent in November, the highest level since 2001.

This will have disappointed interest rate doves, as most analysts now believe eurozone rates will be on hold at 4 per cent well into next year, in spite of signs of slowing growth.

“The eurozone economy has entered a difficult period in which rising inflation will prevent the ECB from responding quickly to a further slowdown in activity,” says Jonathan Loynes at Capital Economics.

No change is expected by the Bank of England, but a case can be made for a quarter-point cut to 5.5 per cent, says Global Insight’s Howard Archer. “The bank does not want to see too sharp a slowdown in growth, and is very aware of the danger of this occurring.”

In parliamentary testimony last week, Bank of England governor Mervyn King said the UK economy faced an uncomfortable short-term future.

Mr King and his monetary policy committee colleagues will be given an idea of how well growth has held up under recent challenging conditions with the publication of purchasing managers’ surveys for November.

The manufacturing index, out today, is widely expected to remain above the 50 level, meaning the sector is still growing. The services sector index is expected to nudge higher after October’s fall to a 53-month low of 53.1.

The Federal Reserve’s policy meeting on December 11 will be informed by this week’s economic numbers as purchasing managers provide data on manufacturing (today) and the service sector (Wednesday).

The main event in the US, however, is November non-farm payrolls data, which are expected to show the rate of job creation slowing.

After October’s 166,000 rise in payrolls, estimates for November range between 50,000 to 80,000 after a poor run in weekly jobless claims. Slower consumer spending is expected to have hit retail employment, while trade and construction jobs are feared to have suffered from the US housing slowdown.

Rate decisions are due tomorrow from Canada, which is expected to hold at 4.5 per cent, and Australia (no change at 6.75 per cent). New Zealand, on Wednesday, is expected to leave its main rate at 8.25 per cent.

You were right Lim. Calm reason wins again.

Lest we forget................



ECB leaves rates unchanged
By Ralph Atkins in Frankfurt
Published: January 10 2008 12:46 | Last updated: January 10 2008 12:46

Eurozone official interest rates were left unchanged on Thursday by the European Central Bank but its worries about the inflation outlook are likely to remain.
The decision by the ECB’s governing council, meeting in Frankfurt, to leave its main policy rate at 4 per cent was expected. The global credit squeeze last year forced the bank to shelve further rises in official borrowing costs, which have remained unchanged since June.


and in Britain



Bank of England holds rates steady
By Delphine Strauss
Published: January 10 2008 12:00 | Last updated: January 10 2008 12:31

The Bank of England left interest rates unchanged at 5.5 per cent on Thursday, opting to take more time to assess the extent of the slowdown in the economy and of inflationary pressures.
The decision matched most analysts’ expectations - only ten of fifty economists polled by Bloomberg thought the Bank’s monetary policy committee would vote to reduce rates for a second consecutive month. But short sterling futures fell after the news as markets had priced in a higher possibility of a cut.


Seems like the blackops/grandcaymanislands/"end is nigh"/"my man in cayman/secretheinverbruggenchaired/ monetary meetings were a figment of someones overactive imagination.

ECB holds rates at 4% despite slowdown
By Ralph Atkins in Athens

Published: May 8 2008 12:45 | Last updated: May 8 2008 12:45

[COLOR=Black]Eurozone interest rates have been left unchanged as the European Central Bank keeps up its battle against inflation, even as the economy slows.

Meeting in Athens on Thursday, the ECB’s governing council left its main policy rate unchanged at 4 per cent – as it has every month since last June. The ECB remains alarmed about inflation trends, especially with oil prices soaring to record highs, and is not as concerned about a possible downturn in economic growth as the US Federal Reserve.


Meanwhile, Jean-Claude Trichet, ECB president, is expected at his press conference later on Thursday to remain relatively upbeat about growth prospects.
Eurozone growth in the first quarter of this year is thought to have remained robust.
However, forward-looking surveys have pointed to a significant weakening in months ahead and the performances of the main eurozone economies appear to be diverging.

Spain is expected to slow dramatically as house prices fall and construction activity is hit. France’s economy has also shown signs of softening significantly. Germany, however, continues to shows signs of resilience – although weak figures for manufacturing orders released this week also pointed to a slowdown ahead.

Earlier on Thursday data released by Germany’s economy ministry showed the country’s industrial production fell as expected in March, hit by weaker construction output as the sector eased after profiting from mild weather earlier in the year.

Mr Trichet’s comments will be followed closely for any hints of fresh co-ordinated action by the world’s central banks – either to help relieve tensions in financial markets or to influence foreign exchange markets. Signs have emerged that the US and eurozone authorities have moved significantly closer to a common position on the desirability of a strong dollar.

By meeting in Athens, the ECB might draw particular attention to the Greek economy, which, with its massive current account deficit, faces the risk of a possibly painful adjustment. The ECB’s governing council meets twice a year outside its home town of Frankfurt.



.........................and the BOE



Bank of England holds rates at 5%
By Delphine Strauss

Published: May 8 2008 12:00 | Last updated: May 8 2008 12:00

The Bank of England’s monetary policy committee left interest rates unchanged at 5 per cent on Thursday suggesting it does not yet think the UK economy has slowed enough to bring inflation back to target in the medium term.

The Bank had been widely expected to hold fire after its quarter-point rate cut in April. Markets had priced in only a small chance of a cut, although investors are betting on a strong probability of rates coming down in June


“With inflation likely to record a sustained breach of 3 per cent later this yearthe MPC has paid more than the usual amount of attention to explaining its actions, and seems most comfortable reducing rates when it’s expected to do so,” said Malcolm Barr, economist at JPMorgan.

The MPC’s task has become more difficult in recent months as higher oil, gas and import prices threaten to drive inflation further above target in the short term, but mounting evidence of an economic slowdown exacerbated by the credit squeeze raises the risk of inflation undershooting its target in the medium term.

Minutes of the MPC’s April meeting showed the committee was divided in its judgement of how the balance of risks had changed, but several members have recently stressed the risk of higher inflation, and played down the implications of falling house prices for consumer spending.

Mervyn King, the Bank’s governor, said last week inflation was likely to rise above 3 per cent for longer than it did last year, and noted that a period of below-trend growth would not be “a disaster in itself”.

When the Bank publishes its latest forecasts for growth and inflation in next week’s Inflation Report, it is likely to show that the outlook for both has worsened since the February report.

“The stage is set for a fairly flinty message from the MPC: weaker growth, rising inflation and little scope for easing,” predicts Michael Saunders, economist at Citi.

“The total effect is likely to be slightly weaker growth and markedly higher inflation for 2008-09,” he added – implying that the economy will need to slow more sharply than the MPC thought in February to return inflation to target over time

I bet you rates come down sometime in the next 30 years though Lim... :rolleyes: :D

I bet you rates come down sometime in the next 30 years though Lim... :rolleyes: :DIt is actually quite likely to happen soon. The inflation is rising, but growth is also slowing. Keeping the rate fixed ensures that the growth will slow down even more. Whether the rates go down in the immediate future depends on how much the growth slows down.

I bet you rates come down sometime in the next 30 years though Lim... :rolleyes: :D

Remember we were also told that the oil price would drop as well!
Oh well.

Crude hit $124 a barrell this week.

Just for the record


ECB raises interest rates to 4.25%
By Ralph Atkins in Frankfurt

Published: July 3 2008 12:45 | Last updated: July 3 2008 14:56

The European Central Bank raised interest rates in the eurozone for the first time in more than a year on Thursday as it stepped up efforts to control mounting inflation pressures.

As expected, the ECB lifted its main interest rate by a quarter percentage point to 4.25 per cent – the first rise in eurozone borrowing costs since June last year.

At the ECB’s press conference following the rate announcement Jean-Claude Trichet, ECB president, said the bank had no bias on future policy moves. Mr Trichet did not use either of the phrases ”heightened alertness” or ”strong vigilance” which have heralded past rate increases, though he cautioned against drawing conclusions from this. ”The fact that we have not mentioned heightened alertness nor strong vigilance doesn’t mean anything,” he said.

Financial markets scrutinised Mr Trichet’s comments for signals on whether further interest rate increases were likely and took his comments to mean that the central bank was unlikely to raise rates again soon.

The euro fell from a ten-week high against the dollar on Thursday following the press conference.

Thursday’s increase comes just days after official figures showed eurozone inflation had hit 4 per cent, the highest since the launch of the euro in 1999 and more than double the ECB’s target of an annual rate “below but close” to 2 per cent. Based on reconstructed-historic data, eurozone inflation was last higher in May 1992.

Mr Trichet’s shock announcement last month that the Frankfurt-based central bank was mulling an interest rate increase highlighted the change in mood among global policymakers away from concerns about the impact of the financial market crisis on growth to focus more on rising inflation risks.

Ahead of the ECB announcement, the Riksbank in Sweden – which is not part of the eurozone - had said it was increasing its main interest rate by a quarter percentage point to 4.5 per cent, adding that it expected to tighten monetary policy twice more during the year.

Still, eurozone growth is showing clear signs of slowing, especially in member states such as Spain and Ireland, hit by property market corrections. Although slower growth could reduce inflationary tensions, the eurozone economy appears to be slipping towards “stagflation” – high inflation rates combined with low growth.

In the latest example of such trends, the German chemicals association said it expected chemicals prices to rise by 3.5 per cent this year, rather than the 2 per cent it had previous expected.
At the same time it revised down its forecast for growth in production – to just 2.5 per cent, compared with the 3 per cent it had previously expected
.

Just for the record


ECB raises interest rates to 4.25%
By Ralph Atkins in Frankfurt

The US currency is going to spike down in a global capitulation IMHO. Pressures on the US Treasury as the need for low short term rates weighs against the need to keep long term rates high to prop up the bond market. Could be some mayhem afoot. Especially if inflation keeps spiking.

The US currency is going to spike down in a global capitulation IMHO. Pressures on the US Treasury as the need for low short term rates weighs against the need to keep long term rates high to prop up the bond market. Could be some mayhem afoot. Especially if inflation keeps spiking.

If your view about the dollar is corrrect - and oil being priced in dollars - then the oil price looks set to increase on that basis alone.

Pain. Pain.

If your view about the dollar is corrrect - and oil being priced in dollars - then the oil price looks set to increase on that basis alone.

Pain. Pain. But if other currencies are stable with only the dollar depreciating, then it shouldn't cause that much pain (save for Americans). Gas prices here for example have been quite stable for a while now at around 1.43 euros per liter, while it has kept increasing steadily in US.

But if other currencies are stable with only the dollar depreciating, then it shouldn't cause that much pain (save for Americans). Gas prices here for example have been quite stable for a while now at around 1.43 euros per liter, while it has kept increasing steadily in US.

Agreed : we're insulated a little bit because the dollar is weak against the euro right now.
This means we can buy more dollars (with euros) to purchase oil.
Thank god for a strong euro!

If your view about the dollar is corrrect - and oil being priced in dollars - then the oil price looks set to increase on that basis alone.

Pain. Pain.Well... I'm only speculating... there isn't much reason to buy dollars unless you are predicting a turnaround as Bush exits and his desire for a weak dollar hopefully goes with him. But the dollar has become very cheap.... relative to it's recent history. At some point it should find support.