Equities are off, the dollar's ascent has been stopped in its stride and sentiment has turned sour after the EU retaliated to the the Trump tariffs with a raft of levies of its own.
Squawk / 04 August 2016 at 11:11 GMT
Managing Partner / Spotlight Group
United Kingdom

Base Rate 0.25% (-25bps from 0.50%)

QE Total £435 Billion (Up from £375 Billion)

The cut in Base Rate was the minimum that the MPC could get away with, but the key is that there was no descent.

In fact the majority of the MPC look for Base to be near zero by year end. Therefore the next inflation forecasts will be as crucial
as the downward revisions in growth.

The increase in QE was shrouded in a split on the MPC, but it will now embrace corporate bonds.

Now there are already straight laced economists saying that the BOE is moving beyond the remit of monetary policy, but I suggest
that this is exactly the time that the central bank has to be aggressive. So I am frustrated that there was not a move to zero Base Rate straight away.

Yes, the decision to leave the EU has created a supply side shock, but that can be corrected by a combination of ULTRA EASY MONEY
and hard hitting supply side measures which should be mapped out in the Autumn Statement.
fxtime fxtime
Whilst I can see that the BoE needed to react to current economic data releases I wonder if devaluing the currency for a net importing country is ideal. Certainly we will in effect import inflation especially foodstuff and oil products but housing side inflation will exacerbate first time buyers purchasing ability. BUY to Let property buyers will benefit as the raised house pricing will make it even harder to buy a home. Carney has also instigated new vetting procedures of fiscal lifestyle for new mortgages which tightens financing further. We may be skewing the market place further and making yet more splinter political groups rather than developing the economy. Pensioners savings will earn less although the difference will be negligible at these rates but the pensioners will thus spend less. Personally I wish he simply supported the banks and used the QE effect to pure infrastructure investment rather than tinkering with old staid fiscal tools.
Krunil48 Krunil48
If the BOE aims to buy corporate bonds it aims to increase the demand for them thereby lowering the interest that companies must pay to raise money and therefore, in theory, allowing them more money for investment? In effect, the Government, via the BOE, is investing public money into private enterprise? This only affects big companies? QE, printing money to lower interest rates generally by using it to buy Government Bonds/ the same as the above. What about all this extra money? Does it not have to be paid back as it increases the countries debt and does it not devalue the existing currency making anyone who holds it worse off? I do not believe Mark Carney should have taken a position on Brexit because if the economy deteriorates he can be seen to have 'talked it down' to prove himself correct. If the economy improves, he was was wrong in his prediction. Resign like George Osbourne, do the decent thing. Margeret Thatcher was against money printing.


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