Best of the Week
Most Popular
1. Five Charts That Show We Are on the Brink of an Unthinkable Financial Crisis- John_Mauldin
2.Bitcoin Parabolic Mania - Zeal_LLC
3.Bitcoin Doesn’t Exist – 2 - Raul_I_Meijer
4.Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - Nadeem_Walayat
5.Labour Sheffield City Council Election Panic Could Prompt Suspension of Tree Felling's Private Security - N_Walayat
6.War on Gold Intensifies: It Betrays the Elitists’ Panic and Augurs Their Coming Defeat Part2 - Stewart_Dougherty
7.How High Will Gold Go? - Harry_Dent
8.Bitcoin Doesn’t Exist – Forks and Mad Max - Raul_I_Meijer
9.UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - GoldCore
10.New EU Rules For Cross-Border Cash, Gold Bullion Movements - GoldCore
Last 7 days
Carillion Bankruptcy and the PFI Sector Spiraling Costs Crisis, Amey, G4S, Balfour Beatty, Serco.... - 16th Jan 18
Artificial Intelligence - Extermination of Humanity - 16th Jan 18
Carillion Goes Bust, as Government Refuses to Bailout PFI Contractors Debt and Pensions Liabilities - 15th Jan 18
What Really Happens in Iran?  - 15th Jan 18
Stock Market Near an Intermediate Top? - 15th Jan 18
The Key Economic Indicator You Should Watch in 2018 - 15th Jan 18
London Property Market Crash Looms As Prices Drop To 2 1/2 Year Low - 15th Jan 18
Some Fascinating Stock Market Fibonacci Relationships... - 15th Jan 18
How to Know If This Stock Market Rally Will Continue for Two More Months? - 14th Jan 18
Everything SMIGGLE from Pencil Cases to Water Bottles, Pens and Springs! - 14th Jan 18
Land Rover Discovery Sport Very Bad MPG Fuel Economy! Real Owner's Review - 14th Jan 18
Gold Miners’ Status Updated - 13th Jan 18
Gold And Silver – Review of Annual, Qrtly, Monthly, Weekly Charts. Reality v Sentiment - 13th Jan 18
Gold GLD ETF Update.. Bear Market Reversal Watch - 13th Jan 18
Stock Market Leadership In 2018 To Come From Oil & Gas - 13th Jan 18
Stock Market Primed for a Reversal - 13th Jan 18
Live Trading Webinar: Discover 3 High-Confidence Trade Set-Ups - 13th Jan 18
Optimum Entry Point for Gold and Silver Stocks - 12th Jan 18
Stock Selloffs Great for Gold - 12th Jan 18
These 3 Facts Show Gold Is Set to Surge in 2018 - 12th Jan 18
How China is Locking Up Critical Resources in the US’s Own Backyard - 12th Jan 18
Stock futures are struggling. May reverse Today - 12th Jan 18
Three Surprising Places You See Cryptocurrency - 12th Jan 18
Semi Seconductor Stocks Canary Still Chirping, But He’s Gonna Croak in 2018 - 12th Jan 18
Land Rover Discovery Sport Panoramic Sunroof Questions Answered - 12th Jan 18
Information About Trading With Alpari And Its Advantages - 12th Jan 18
Stock Market Investing 2018 - “I Hope I’m Making a Bad Buy” - 11th Jan 18
S&P 500 Fluctuates As Stock Market May Be Topping, Or Not? - 11th Jan 18
SPECTRE Microprocessor Security Flaw - Big Brother = You - 11th Jan 18
7 Market Forecasts 2018 from the Brightest Financial Minds I Know - 11th Jan 18
It’s Not Enough to Be Contrarian - 11th Jan 18
Stocks That Take One for A Roller Coaster Ride Through the Thick And Thin Of Every Single Investment Made - 11th Jan 18
Police Arrest Tree Protester on Meersbrook Park Road, Sheffield - 10th Jan 18
Stock Market Aggressive Sell Signals - 10th Jan 18
The 2018 Decline in Precious Metals - 10th Jan 18
Gold Hits All-Time Highs Priced In Emerging Market Currencies - 10th Jan 18
TMV : 3X Leveraged Short on US Treasury Bonds - 10th Jan 18
Here are the Key Levels in Gold & Gold Miners - 10th Jan 18
Investment Advice That Probably No One Gave You Before - 9th Jan 18
S&P 500 Sets Another Record, But This May Be Short-Term Top - 9th Jan 18
Failure of War Party Foreign Policy - 9th Jan 18
Buying a Land Rover Discovery Sport HSE Black - Interior Review - 9th Jan 18
More Important Than Gold’s Bottoming Price - 9th Jan 18
Getting Bullish on Gold - 9th Jan 18
Share Market Is One Of The Most Encouraging Opportunity For Young... - 9th Jan 18
Stock Market Close Call... - 8th Jan 18
If You Hold VT Or Any Other Global ETF, You’ve Put All Your Eggs In One Basket - 8th Jan 18
Blowup with China or North Korea Could Change Almost Everything Overnight - 8th Jan 18
The Real LORAX and Once-ler's of Sheffield's Street Tree Felling's - 8th Jan 18
Share Trading is an Interesting for Everyone - 8th Jan 18
The Way to the New Cold War - 8th Jan 18
A little Stock Market Euphoria? - 8th Jan 18

Market Oracle FREE Newsletter

6 Critical Money Making Rules

Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut!

Interest-Rates / UK Interest Rates Nov 02, 2017 - 07:28 PM GMT

By: Nadeem_Walayat

Interest-Rates

The Bank of England with much forewarning hiked UK interest rates by 100% today, raising the base interest rate from 0.25% to 0.5%. However, before everyone starts to panic that this heralds the start towards of rates rising to pre 2008 levels, instead the reality is that all that the Bank of England has done is to reverse the PANIC BREXIT INTEREST RATE CUT of August 2016. Which had seen the Bank of England cut interest rates to there lowest levels in the Bank of England's 320 year history. Which followed over 7 years of rates being held at 0.5% the duration of which had seen virtually ALL economists reveal the true extent of their ineptitude as they had collectively consistently forecast that UK Interest rates were always just about to head higher, that a a series of rate hikes were always just months away, which not only never materialised but culminated in the reality of a RATE CUT last year!


The base rate graph illustrates one fundamental fact that exposes the Bank of England's propaganda that the clueless economists have once more swallowed hook like and sinker, for today's rate rise has nothing to do with controlling inflation, or any of the other reasons which have spewed from the mouth of Mark Carney today. For what really motivates the Bank of England's interest rates policy is not Inflation or the UK economy for inflation has soared to over 3% which under normal conditions would demand a normalised base interest rate of about 4% to curb. Instead there has only ever been one motivation behind the Bank of England's setting of interest rates at PANIC levels of near 0% which is to generate artificial profits for the Bank of England's banking sector bankster brethren so that they don't go bankrupt, and therefore THAT IS THE PRIMARY MOTIVATION FOR TODAYS MARGINAL INTEREST RATE HIKE that ensures that UK interest rates REMAIN at PANIC LOW LEVELS so as the banks continue to generate artificial profits at the expense of savers who are ALL in receipt of SUB INFLATION interest on their savings.

During much of 2016 the REMAIN establishment had perpetuated propaganda for a series of rate hikes that would follow a a BREXIT vote outcome that was destined to send consumer borrowing rates soaring, which at the time I repeatedly warned was just NOT going to happen for the fundamental reason that BrExit induced uncertainty would make a rate hike LESS likely as the last thing the Bank of England would want to do is to add to market uncertainty i.e. the complete opposite to REMAIN propaganda. In fact I stated that BrExit could even result in a rate CUT as the following excerpt illustrates:

06 Feb 2016 - UK Interest Rates, Economy GDP Forecasts 2016 and 2017

UK Interest Rates Conclusion

Therefore the overwhelming picture is one of the Bank of England continuing to kick the interest rate can down the road for the whole of 2016 and probably for the whole of 2017 too, even if inflation rises to above 2%. Where even a BrExit induced mini-sterling crisis is unlikely to prompt the BoE to shift on UK interest rates. Especially as I expect the UK economy to significantly weaken to an average GDP of 1.6% per annum that compares against BoE expectations of 2.6% per annum.

The bottom line is that a paralysed BoE remains terrified of its banking brethren that could yet go bankrupt again, especially given Britain's continually expanding debt mountain, and thus will only hike rates when it is faced with an even worse crisis. In fact odds probably favour a CUT in interest rates rather than a RISE, maybe even going negative, though negative interest rates just do not work because they act as a tax on the economy instead of a stimulus.

Market Implications

Low borrowing costs and savings interest rates are likely to continue to persist for the next 2 years. Therefore savers should eye fixes of at least 2 years for higher rates. Bank customers also need to be aware that there is a real risk of NEGATIVE interest rates, which means the BANKS will STEAL a percentage of your bank deposits each year. That's right, the banks take your bank deposit, loan it out at 5%, 10%, or 20% and then will CHARGE you for allowing them to do so with your money. If this is not the behaviour of crime syndicate then what is it?

Expect further ongoing weakness for sterling, a trend forecast for which will follow in a separate analysis. Lack of rate hikes and the prospects for further easing are supportive of the stock and housing markets for 2016.

And again the accompanying video analysis:

So instead of raising rates the Bank of England opened the money printing flood gates to further inflate the Banking Sectors artificial profits:

Mark Carney key points concerning interest rates and QE :

"In my view, and I am not pre-judging the views of the other independent Monetary Policy Committee (MPC) members, the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer,"

"As we have seen elsewhere, if interest rates are too low - or negative - the hit to bank profitability could perversely reduce credit availability or even increase its overall price,"

So my advice to savers and investors at the start of 2016 proved highly prescient that savers should seek to lock into the then higher savings rates being offered ahead of BrExit which since have continued to fall. In fact we have become so conditioned by near zero interest rates that we forget we are living in a time of central bank PANIC, which is what 0.5% interest rates let alone the cut to 0.25% reflected near 8 years of perpetual central bank PANIC!

Nothing illustrates this point than the rates savers were able to secure before the panic cuts in interest rates began as I warned over 7 years ago to lock in rates for as long as possible, several years in fact though not even I foresaw that the panic would still persist near 8 years on!

08 Oct 2008 - UK Interest Rate Forecast 2009

Savers - To reiterate what I have been saying over the last 6 months, savers still have a a golden opportunity to lock in high fixed savings rates which in the UK are above 7% . These rates won't stay around for much longer, were talking perhaps in the days rather than weeks or months. So the time for action is now ! - Yes, banks can go bankrupt but savings are protected which includes accumulated interest. In the UK the protection is for the first £50k per banking group.

And there is even worse to come for savers as my following video on the War on Cash illustrates that the banks are engineering a situation that will allow outright theft of bank customer depositors, NEGATIVE interest rates as recent press stories of HSBC, RBS and Barclays warning business customers that they could be CHARGED INTEREST on CREDIT balances which today's rate cut brings closer to materialising.

https://youtu.be/WGbEpnOqY3w

So despite the mainstream propaganda media showing happy savers literally dancing and skipping in the wake of today's base rate hike, instead the reality of a stealth theft of the value of savings remains as inflation has soared to over 3%, which means EVERY saver today is having the value of their hard earned savings stolen which today's base rate does little to alter, as it would require a base rate of at least 2% before savings rates would start exceed CPI inflation, let alone the significantly higher RPI.

I will further cover the prospects for what today's marginal rate hike means of means for savers, investors and the UK housing market in my forthcoming in-depth analysis, so ensure you are subscribed to my always free newsletter and youtube channel.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2017 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules