Economics.

[SirGalahad]

So BOE cut rates in response to the referendum to avoid any possible negative short term outcomes. Now its looking at raising the rates.

Question is, what would have happened if it did nothing post Brexit. Were they too quick to respond?

Anyone taking the rising i-rates as evidence that Brexit hasn't been as bad as predicted, a little fact is we have not left the EU and any short term gloating will soon fade away.

Tough times lie ahead.

 

[JohnD]

The value of Virtual Unreality, loved by international crooks and speculators, has also taken a tumble.

https://www.bloomberg.com/news/arti...r-bitcoin-exchange-halt-by-month-end-j7lblmdg

 

[Doggit]

I think that when Carney lowered the rate post Brexit vote, it was an unnecessary panic move, and that he's now misreading the data to put rates back up, or is he really just trying to correct the earlier mistake. In dropping the base rate to 0.25%, he effectively encouraged the housing market to overheat. Of course, Osbourne previous decision to raise stamp duty is now correcting things, and the removal of interest payments being ofset against rents for landlords, will have a further effect, and that'll cause another dip in the housing market in a couple of years when some landlords have to start selling of their properties.

Carneys telling the markets that he's going to raise interest rates, and the pound has risen against the dollar on the news of it, and that'll hit exports, so it begs the question, do any of them know what they are doing.

 

[IWalkLikeHimaMartian]

....., so it begs the question, do any of them know what they are doing.

Perhaps you should explain it to them.

 

[SirGalahad]

Carneys telling the markets that he's going to raise interest rates, and the pound has risen against the dollar on the news of it, and that'll hit exports, so it begs the question, do any of them know what they are doing.

You make a good point inadvertently. The BOE mandate is monetary and financial stability. We simply cannot correct the problems of the UK using the instruments such as interest rates, QE etc.

 

[Doggit]

I completetley agree with you. QE was intended to stimulate the economy, but the money given to the banks was used to fill their coffers, and they then didn't need to pay good rates to savers. Unfotunately, the BOE manadate can't be fulfilled, because we're in uncharted waters, and they've got no experience to fall back on.

 

[SirGalahad]

Another unintended consequence of Brexit. Exporters instead of expanding production and jobs simply raised prices and horded the cash. So the boom of lower currency effect was minimal.

https://www.theguardian.com/busines...-hoarded-gains-from-fall-in-sterling-says-ons

Cameron really took a huge gamble and lost.

 

[Doggit]

I think it's this little paragraph tucked away near the end of the story that might have a bigger impact on the sitation.

ONS analysts said it was difficult to estimate the impact of higher import prices on profits without a more detailed study of the cost of raw materials used to manufacture goods.

This is what I've been saying all along. Because we import engines and car parts from aborad, and then just assemble the cars, the lower pound increases the cost of raw material costs and anything we have to everything we have to import before we can export anything.

A the article is has been reported in the Guardian, I think I'm going to have to consider political bias on this one.

 

[EFLImpudence]

Because we import engines and car parts from aborad, and then just assemble the cars, the lower pound increases the cost of raw material costs and anything we have to everything we have to import before we can export anything.

You say 'we' - but doesn't it depend on who paid for the engine and other parts to be made.

If it's BMW, Nissan or Honda, for example, does that apply?

 

[Doggit]

You've made a good point EFL, and I'm not sure if I can honestly answer it. It could well be that each plant/business, is a cost centre, and a profit centre as well, and the profits would then be reported back to the parent company, but the principle should still apply. If the pound drops, then raw materials become more expensive, so the sales price should have to rise to reflect it. As our exports surged after the pound dropped, then I'd be suprised if the surge was due to just a 3.2% drop in the price of goods.

 

[JohnD]

As our exports surged after the pound dropped

Did they? The pound dropped 24 June 2016. Have you got a graph of trade figures before and after?

I can't see it on this

Figure 1: Rolling 3-month UK trade balances, July 2013 to July 2017

https://www.ons.gov.uk/economy/nati...countries-widens-in-the-3-months-to-july-2017

Download this chart

 

[Roger928]

Self made millionaire and entrepreneur James Dyson says we should leave the eu without a deal and predicts that's how it will be. The single market makes up such a tiny proportion of our exports its not needed.
I agree. Like me he was/is singing and dancing after and since the brexit vote.
Clever chap James.
Mean while the poor old rebel remoaners are wallowing in pessimistic doom and gloom.

 

[JohnD]

The single market makes up such a tiny proportion of our exports its not needed.

Are you sure you've got that right?

 

[EFLImpudence]

Self made millionaire and entrepreneur James Dyson

I thought it was Malaysian workers, and customers stupid enough to pay his prices.

 

[Roger928]

I thought it was Malaysian workers, and customers stupid enough to pay his prices.

No schitt?