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Will the Bank of England raise rates on 4 November?


MongiIG

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Will the Bank of England raise rates on 4 November?

With inflation seemingly less ‘transitory’ than originally anticipated, is it reasonable to expect central banks to act sooner than anticipated?

IGTV's Jeremy Naylor looks at the trade around sterling on recent news from the Bank of England’s governor that the central bank may have to act sooner than thought.

https://www.ig.com/uk/market-insight-articles/will-the-bank-of-england-raise-rates-on-4-november--211018

When will interest rates rise? - Times Money Mentor

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I've had 2022 in my diary for years - based off cycle analysis

Inflationary pressures at the end of the cycle are nice to see to confirm thinking (not on the wallet I might add!) - I'm not an Interest rate trader, but if the cycle is working/worked then from 2022 it'll be a gradual rise back to 5-7% territory 

If I had to hang my hat on it I'd say up to those levels by end 2023 / 2024

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29 minutes ago, THT said:

I've had 2022 in my diary for years - based off cycle analysis

Inflationary pressures at the end of the cycle are nice to see to confirm thinking (not on the wallet I might add!) - I'm not an Interest rate trader, but if the cycle is working/worked then from 2022 it'll be a gradual rise back to 5-7% territory 

If I had to hang my hat on it I'd say up to those levels by end 2023 / 2024

Hi @THT

Traders now see 40 basis points of tightening this year to take the key rate to 0.5%, compared with around 20 basis points last week. They also see further rate increases next year, betting that borrowing costs will climb to 1.25% in November 2022. According to Bloomberg.

Yet there’s a growing sense that higher rates risk damaging the U.K.’s fragile economic recovery. Economists surveyed by Bloomberg have cut their estimate for 2022 growth by 0.4 percentage points to 5.1%. 
 

image.png

 

 

MongiIG

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50 minutes ago, MongiIG said:

Hi @THT

Traders now see 40 basis points of tightening this year to take the key rate to 0.5%, compared with around 20 basis points last week. They also see further rate increases next year, betting that borrowing costs will climb to 1.25% in November 2022. According to Bloomberg.

Yet there’s a growing sense that higher rates risk damaging the U.K.’s fragile economic recovery. Economists surveyed by Bloomberg have cut their estimate for 2022 growth by 0.4 percentage points to 5.1%. 
 

image.png

 

 

MongiIG

I'd go with that - I'm working off the Interaction of the Interest Rate cycle and the Stock Market cycle - Stock turned Inflationary from a cycle perspective late 2016, from deflationary which started 2000, for that 16 year cycle everything deflationary has happened and the action to try to create inflation - Robert Pretcher (Elliott Wave International) wrote "Conquer the crash" in 1999 - although he is/was wrong on the stock market outlook, the rest of the book was pretty much spot on from a central bank/economic aspect tackling deflationary pressures etc

From a cyclic point of view the stock market cycle from 2000 basically repeated the 1929 crash cycle, x cycles back in the same stock market cycle - last time BoE Int rates were depressed for 22 years was from 1929 until 1951 which coincided with said stock market cycle 

We've a generation of people who think Interest rates are always this low! the shock should be in the property market and especially anyone with a Buy to Let Investment property that has got a bad/poor yield as well as mortgaged to the hilt - they'll more than likely see negative returns once taxation and costs running it are taken into account, which will be good for FTB's as they'll have a nice supply of affordable housing stock to pick from as the rise to normality for Int rates should then cause a dip in the property market (possibly) 

Different rules apply to the markets during deflationary and Inflationary cycles and you find that central banks aren't on it in terms of getting it right which is why they got caught out in 2003 / 2009 and now with Inflation to which they [BoE] should react to Inflationary pressures by raising rates even though we all know for some time Inflation has been occurring

Fun times

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TBoE will have to increase rates at some point.

But the facts are that Market rates (Bonds & inter-rate) have more influence on this and the Central Banks (UK, USA Europe, etc..) react to the, lagging behind them.

Most Annalists and commentators think the FED and others control & know what they are doing but NOT SO.

Time will tell as the Governments around the world have been herding in keeping rates down for too long because they want to borrow, borrow & borrow more to "get out of the current debt mess built up. BIG IRONY. Also, the Banks (led by central banks & the Big Banks that run the financial system for & with the central banks encourage lending as they they make money from that. 

PUT IT ANOTHER WAY:  IF THE CENTRAL BANKS & Banks really knew what they were doing and their theories were right THEN WE SHOULD NOT BE IN IN ANY FINANCIAL TROUBLE OR MESS OR WITH THE HIGHEST EVER DEBT BUBBLE BUILT UP IN HISTORY (AROUND THE WORLD).

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30 minutes ago, skyreach said:

TBoE will have to increase rates at some point.

But the facts are that Market rates (Bonds & inter-rate) have more influence on this and the Central Banks (UK, USA Europe, etc..) react to the, lagging behind them.

Most Annalists and commentators think the FED and others control & know what they are doing but NOT SO.

Time will tell as the Governments around the world have been herding in keeping rates down for too long because they want to borrow, borrow & borrow more to "get out of the current debt mess built up. BIG IRONY. Also, the Banks (led by central banks & the Big Banks that run the financial system for & with the central banks encourage lending as they they make money from that. 

PUT IT ANOTHER WAY:  IF THE CENTRAL BANKS & Banks really knew what they were doing and their theories were right THEN WE SHOULD NOT BE IN IN ANY FINANCIAL TROUBLE OR MESS OR WITH THE HIGHEST EVER DEBT BUBBLE BUILT UP IN HISTORY (AROUND THE WORLD).

Exactly

The FED was "created" in 1913 to prevent and stop financial stock market crashes from happening again in response to the 1907 rich mans panic - so far to date the FED has 100% failure rate

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19 hours ago, THT said:

I'd go with that - I'm working off the Interaction of the Interest Rate cycle and the Stock Market cycle - Stock turned Inflationary from a cycle perspective late 2016, from deflationary which started 2000, for that 16 year cycle everything deflationary has happened and the action to try to create inflation - Robert Pretcher (Elliott Wave International) wrote "Conquer the crash" in 1999 - although he is/was wrong on the stock market outlook, the rest of the book was pretty much spot on from a central bank/economic aspect tackling deflationary pressures etc

From a cyclic point of view the stock market cycle from 2000 basically repeated the 1929 crash cycle, x cycles back in the same stock market cycle - last time BoE Int rates were depressed for 22 years was from 1929 until 1951 which coincided with said stock market cycle 

We've a generation of people who think Interest rates are always this low! the shock should be in the property market and especially anyone with a Buy to Let Investment property that has got a bad/poor yield as well as mortgaged to the hilt - they'll more than likely see negative returns once taxation and costs running it are taken into account, which will be good for FTB's as they'll have a nice supply of affordable housing stock to pick from as the rise to normality for Int rates should then cause a dip in the property market (possibly) 

Different rules apply to the markets during deflationary and Inflationary cycles and you find that central banks aren't on it in terms of getting it right which is why they got caught out in 2003 / 2009 and now with Inflation to which they [BoE] should react to Inflationary pressures by raising rates even though we all know for some time Inflation has been occurring

Fun times

 

3 hours ago, skyreach said:

TBoE will have to increase rates at some point.

But the facts are that Market rates (Bonds & inter-rate) have more influence on this and the Central Banks (UK, USA Europe, etc..) react to the, lagging behind them.

Most Annalists and commentators think the FED and others control & know what they are doing but NOT SO.

Time will tell as the Governments around the world have been herding in keeping rates down for too long because they want to borrow, borrow & borrow more to "get out of the current debt mess built up. BIG IRONY. Also, the Banks (led by central banks & the Big Banks that run the financial system for & with the central banks encourage lending as they they make money from that. 

PUT IT ANOTHER WAY:  IF THE CENTRAL BANKS & Banks really knew what they were doing and their theories were right THEN WE SHOULD NOT BE IN IN ANY FINANCIAL TROUBLE OR MESS OR WITH THE HIGHEST EVER DEBT BUBBLE BUILT UP IN HISTORY (AROUND THE WORLD).

Hi @THT and @skyreach,

Thanks for sharing your views on the BoE upcoming event.

Just to add, Mike Riddell, a senior portfolio manager at Allianz Global Investors said “There is a lot of history that suggests bad things happen soon after yield curves start to invert, and that’s what is now priced at the front end of the UK rates curve.”

image.png

 

The big question from the markets now is the BoE about to make a policy mistake ? As investors are worrying over potential BoE rates mistake.

 

All the best - MongiIG

 

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  • 2 weeks later...

I think the BoE will raise the rates by 0.25%.

Consumer price inflation has increased due to sky rocketing commodities.

Central Banks played about with an arbitrary 2% standard as if that is the key factor all of the Economy depends on and no other factor is important or has more influence. They have become by habit, have a fixed focus  - inflation & rates.

A financial Publishing house CEO wrote a book on thousands of years of financial / economics of various past civilisations and established  an amasing set of key whys of how they failed in the end. Our CURRENT CIVILISATION IS NO DIFFERENT, NOR CAN IT MANIPULATE AWAY FINANCIAL MISMANAGEMENT.

It has apparently never occurred to any Banker or Economist (except a few) , in the last 80-100 years, that MONEY MANAGEMENT IS OF CRITICAL IMPORTANCE.

Oh if they did (assume I am wrong) then why have they failed to handle foul accounting practices (often reported), letting greed change the good empirical practices (via Bankers lobby system to change & relax financial laws), not penalise enough or more severely institutions that have allowed criminal money to be laundered, allowing (& profiting the wrong way) from indebtedness increases being allowed as if that is natural when it is NOT ( since the 1960s ), ..... the list can go on.

MAYBE THE KEY FACTORS INCLUDE that OUTGOINGS SHOULD BE LESS THAN INCOME (CEO & CFO of the old 1970s GENERAL ELECTRIC COMPANY UNDERSTOOD THIS REALLY WELL).

THAT EXPANDING TOO FAST OR TOO SLOW ARE JUST AS TROUBLESOME IN ANY BUSINESS. Too slow and you do not do well, too fast an expansion and the business is over leveraged.

The Central Banking system, as many financial experts have said, when a group of Business individuals got together and created a system that benefits them at Jkyll Island in 1911 ( J D Rockefeller, J P Morgan,& others). The FED was created 1913. In 1933 key laws changed and the FED took full control of running government financing actions. The idea that it was to prevent bubbles or to handle them has NOW BEEN PROVEN TO BEEN A FAILURE. HISTORY HAS SHOWN THIS.

It is a GREAT SHAME FOR IT TO COME TO THIS WHEN THESE CLEVER PEOPLE HAD THE CHANCE TO MAKE A DIFFERENCE BUT DID NOT.

Commercial investors / financiers increase Bond rates after observing what is happening in the real Economy. The Fed and other Central Bankers follow afterwards - check out past history.

Mind you European Central Bank chief thinks she is right by stating that those rises is wrong (effectively). ANYONE CAN GIVE GLIB ANSWERS but all the incorrect analyses and evaluations are soon forgotten. Then the SAME OLD FAILED "SOLUTIONS" ARE USED AGAIN, AND AGAIN.

THIS TIME WHENEVER THE BUBBLE BREAKS and the ECONOMY COLLAPSES  A NEW GATHERING OF THE FINANCIERS WILL OCCUR (BRETTON WOODS HAS FAILED) TO CREATE A NEW "SOLUTION". FUNNY THING IS NONE OF THE BAD PRACTICES WOULD GET HANDLED. THE "SOLUTION" WILL BE THE MECHANISMS THEY WANT TO NEW INDEPENDENT GROWTH OF CRYPO CURRENCY COMPETITION UNDER CONTROL AND BANNING (SLOWLY) CASH SO PEOPLE CANNOT TAKE THEIR MONEY OUT OF THE SYSTEM SHOULD BANKS COLLAPSE OR TO MAKE PEOPLE PAY government debt built up -- via negative interest rates or other ways.

QUESTION.

Why are not the companies or banks that caused or encouraged bad practices been made to go bankrupt?

Government or other well operated companies can take over the collapsed companies or else  just learn from it.

 

 

  • Like 1
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19 minutes ago, skyreach said:

I think the BoE will raise the rates by 0.25%.

Consumer price inflation has increased due to sky rocketing commodities.

Central Banks played about with an arbitrary 2% standard as if that is the key factor all of the Economy depends on and no other factor is important or has more influence. They have become by habit, have a fixed focus  - inflation & rates.

A financial Publishing house CEO wrote a book on thousands of years of financial / economics of various past civilisations and established  an amasing set of key whys of how they failed in the end. Our CURRENT CIVILISATION IS NO DIFFERENT, NOR CAN IT MANIPULATE AWAY FINANCIAL MISMANAGEMENT.

It has apparently never occurred to any Banker or Economist (except a few) , in the last 80-100 years, that MONEY MANAGEMENT IS OF CRITICAL IMPORTANCE.

Oh if they did (assume I am wrong) then why have they failed to handle foul accounting practices (often reported), letting greed change the good empirical practices (via Bankers lobby system to change & relax financial laws), not penalise enough or more severely institutions that have allowed criminal money to be laundered, allowing (& profiting the wrong way) from indebtedness increases being allowed as if that is natural when it is NOT ( since the 1960s ), ..... the list can go on.

MAYBE THE KEY FACTORS INCLUDE that OUTGOINGS SHOULD BE LESS THAN INCOME (CEO & CFO of the old 1970s GENERAL ELECTRIC COMPANY UNDERSTOOD THIS REALLY WELL).

THAT EXPANDING TOO FAST OR TOO SLOW ARE JUST AS TROUBLESOME IN ANY BUSINESS. Too slow and you do not do well, too fast an expansion and the business is over leveraged.

The Central Banking system, as many financial experts have said, when a group of Business individuals got together and created a system that benefits them at Jkyll Island in 1911 ( J D Rockefeller, J P Morgan,& others). The FED was created 1913. In 1933 key laws changed and the FED took full control of running government financing actions. The idea that it was to prevent bubbles or to handle them has NOW BEEN PROVEN TO BEEN A FAILURE. HISTORY HAS SHOWN THIS.

It is a GREAT SHAME FOR IT TO COME TO THIS WHEN THESE CLEVER PEOPLE HAD THE CHANCE TO MAKE A DIFFERENCE BUT DID NOT.

Commercial investors / financiers increase Bond rates after observing what is happening in the real Economy. The Fed and other Central Bankers follow afterwards - check out past history.

Mind you European Central Bank chief thinks she is right by stating that those rises is wrong (effectively). ANYONE CAN GIVE GLIB ANSWERS but all the incorrect analyses and evaluations are soon forgotten. Then the SAME OLD FAILED "SOLUTIONS" ARE USED AGAIN, AND AGAIN.

THIS TIME WHENEVER THE BUBBLE BREAKS and the ECONOMY COLLAPSES  A NEW GATHERING OF THE FINANCIERS WILL OCCUR (BRETTON WOODS HAS FAILED) TO CREATE A NEW "SOLUTION". FUNNY THING IS NONE OF THE BAD PRACTICES WOULD GET HANDLED. THE "SOLUTION" WILL BE THE MECHANISMS THEY WANT TO NEW INDEPENDENT GROWTH OF CRYPO CURRENCY COMPETITION UNDER CONTROL AND BANNING (SLOWLY) CASH SO PEOPLE CANNOT TAKE THEIR MONEY OUT OF THE SYSTEM SHOULD BANKS COLLAPSE OR TO MAKE PEOPLE PAY government debt built up -- via negative interest rates or other ways.

QUESTION.

Why are not the companies or banks that caused or encouraged bad practices been made to go bankrupt?

Government or other well operated companies can take over the collapsed companies or else  just learn from it.

 

 

Hi @skyreach

Thanks for sharing your views for todays UK interest rate decision.

GBP PRICE, NEWS AND ANALYSIS:

The Bank of England’s monetary policy committee is almost certain to raise UK Bank Rate to 0.25% today from the current 0.10%.

However, that 15bps increase has been fully priced in by the markets already and GBP/USD is therefore more likely to weaken than strengthen in response.

For the full article see blog post below.

All the best - MongiIG

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GBP/USD Tumbles After Bank of England Leaves UK Interest Rate Unchanged.

GBP/USD Tumbles After Bank of England Leaves UK Interest Rate Unchanged

 

GBP PRICE, BANK OF ENGLAND NEWS AND ANALYSIS:

  • The Bank of England’s monetary policy committee has kept UK Bank Rate at 0.10% rather than increasing it to 0.25% as had been expected by the markets.
  • As the 15bps increase had already been fully priced in, the decision sent GBP/USD sharply lower.

**THIS STORY WILL BE UPDATED SOON. PLEASE CHECK IN FOR MORE**

GBP/USD FALLS AFTER BANK OF ENGLAND LEAVES BANK RATE UNCHANGED

GBP/USD is falling back steeply after the Bank of England’ monetary policy committee left UK Bank Rate at 0.1% rather than increasing it by 15 basis points to 0.25%, as had been fully priced in by the markets. MPC members were split on the decision, voting 7-2 in favor, with the two dissenters wanting a hike.

In polls by the Reuters and Bloomberg news agencies, analysts asked for their opinions had been split between those expecting no change and those predicting a rate rise as the UK economy recovers strongly from the pandemic-induced downturn, lifting inflation with it. The vote was 6-3 in favor of leaving the Bank’s quantitative easing program at £895 billion.

At the same time, the BoE published the meeting minutes and its quarterly Monetary Policy Report showing that a rate rise will be necessary over the coming months if jobs and inflation continue on their current courses. Inflation is forecast to peak at 5% next April, before falling back, and UK growth has been downgraded.

GBP/USD PRICE CHART, FIVE-MINUTE TIMEFRAME (NOVEMBER 4, 2021)

Latest GBP/USD price chart.

Source: IG (You can click on it for a larger image)

Now, the focus for GBP traders will be the Bank’s news conference at 1230 GMT, where its Governor Andrew Bailey will explain why it did not tighten monetary policy and answer questions from the press.

Written by Martin Essex, Analyst, 4th November 2021. DailyFX

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