- British inflation running above 10%
- BoE to raise rates by 75 bps, analysts say
- Hike comes after period of intense turmoil in Britain
- BoE set to start selling off bonds stockpile
AiY(D)
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AsleepInYorkshire wrote:Bank of England poised to raise rates by most in 33 yearsBank Rate expected to peak at about 4.75% in 2023, down from more than 6% before the sudden end of "Trussonomics."
- British inflation running above 10%
- BoE to raise rates by 75 bps, analysts say
- Hike comes after period of intense turmoil in Britain
- BoE set to start selling off bonds stockpile
AiY(D)
odysseus2000 wrote:
My guess is that the central banks are happy to have inflation rip as it effectively reduces the size of their debt and that there will be no effective attempts to stop the gouging of consumers till we have had several years of inflation and national debts have been eroded.
odysseus2000 wrote:
I expect a complete focus on lagging indicators and for bonds to fall more. Presumably UK pension funds will have had to find some creative way around their mandates to hold a lot of guilts as otherwise the pension industry goes over and with it the banks via counter party risk.
dealtn wrote:odysseus2000 wrote:
My guess is that the central banks are happy to have inflation rip as it effectively reduces the size of their debt and that there will be no effective attempts to stop the gouging of consumers till we have had several years of inflation and national debts have been eroded.
What Central Bank Debt?odysseus2000 wrote:
I expect a complete focus on lagging indicators and for bonds to fall more. Presumably UK pension funds will have had to find some creative way around their mandates to hold a lot of guilts as otherwise the pension industry goes over and with it the banks via counter party risk.
Why would pension funds not want to buy more Gilts? Why do they need to be creative? Why do you think they "go over"? Pension funds are healthier now and have smaller deficits, generally, as rates have risen.
odysseus2000 wrote:Looking at the commodity prices most are well off their highs, but very many business are jacking up prices to what ever the market will take. A classic example being natural gas which is back to where it was a year ago but utilities are offering contracts that are several times the prices of a year ago.
My guess is that the central banks are happy to have inflation rip as it effectively reduces the size of their debt and that there will be no effective attempts to stop the gouging of consumers till we have had several years of inflation and national debts have been eroded.
I expect a complete focus on lagging indicators and for bonds to fall more. Presumably UK pension funds will have had to find some creative way around their mandates to hold a lot of guilts as otherwise the pension industry goes over and with it the banks via counter party risk.
If things proceed as normal we can expect property prices to get hurt and many buyers to be in negative equity situations, while others are murdered with higher mortgage payments. I expect the politicians to present this has a happy and needed period of consolidation.
Regards,
odysseus2000 wrote:dealtn wrote:odysseus2000 wrote:
My guess is that the central banks are happy to have inflation rip as it effectively reduces the size of their debt and that there will be no effective attempts to stop the gouging of consumers till we have had several years of inflation and national debts have been eroded.
What Central Bank Debt?odysseus2000 wrote:
I expect a complete focus on lagging indicators and for bonds to fall more. Presumably UK pension funds will have had to find some creative way around their mandates to hold a lot of guilts as otherwise the pension industry goes over and with it the banks via counter party risk.
Why would pension funds not want to buy more Gilts? Why do they need to be creative? Why do you think they "go over"? Pension funds are healthier now and have smaller deficits, generally, as rates have risen.
Pension funds were forced by government legislation to buy gilts even when the rates were very low. When the Truss government policy produced a rise in interest rates the price of guilts reversed and at that point all the pension funds, who had been using gilts as collateral for counter party trades with the banks started to get margin calls which they could not support, effectively sending the banks towards bankruptcy as they had leant money to the pension funds based on the gilt collateral. This forced the boe to buy gilts to get the price up and null the margin calls.
Regards,
odysseus2000 wrote:dealtn wrote:odysseus2000 wrote:
My guess is that the central banks are happy to have inflation rip as it effectively reduces the size of their debt and that there will be no effective attempts to stop the gouging of consumers till we have had several years of inflation and national debts have been eroded.
What Central Bank Debt?odysseus2000 wrote:
I expect a complete focus on lagging indicators and for bonds to fall more. Presumably UK pension funds will have had to find some creative way around their mandates to hold a lot of guilts as otherwise the pension industry goes over and with it the banks via counter party risk.
Why would pension funds not want to buy more Gilts? Why do they need to be creative? Why do you think they "go over"? Pension funds are healthier now and have smaller deficits, generally, as rates have risen.
Pension funds were forced by government legislation to buy gilts even when the rates were very low. When the Truss government policy produced a rise in interest rates the price of guilts reversed and at that point all the pension funds, who had been using gilts as collateral for counter party trades with the banks started to get margin calls which they could not support, effectively sending the banks towards bankruptcy as they had leant money to the pension funds based on the gilt collateral. This forced the boe to buy gilts to get the price up and null the margin calls.
Regards,
dealtn wrote:odysseus2000 wrote:dealtn wrote:odysseus2000 wrote:
My guess is that the central banks are happy to have inflation rip as it effectively reduces the size of their debt and that there will be no effective attempts to stop the gouging of consumers till we have had several years of inflation and national debts have been eroded.
What Central Bank Debt?odysseus2000 wrote:
I expect a complete focus on lagging indicators and for bonds to fall more. Presumably UK pension funds will have had to find some creative way around their mandates to hold a lot of guilts as otherwise the pension industry goes over and with it the banks via counter party risk.
Why would pension funds not want to buy more Gilts? Why do they need to be creative? Why do you think they "go over"? Pension funds are healthier now and have smaller deficits, generally, as rates have risen.
Pension funds were forced by government legislation to buy gilts even when the rates were very low. When the Truss government policy produced a rise in interest rates the price of guilts reversed and at that point all the pension funds, who had been using gilts as collateral for counter party trades with the banks started to get margin calls which they could not support, effectively sending the banks towards bankruptcy as they had leant money to the pension funds based on the gilt collateral. This forced the boe to buy gilts to get the price up and null the margin calls.
Regards,
This is incorrect on so many points. Rather than correcting you it might be better for you to go and actually acquire some knowledge (hint there are even threads about this very subject on this site).
scrumpyjack wrote:I see Eurozone inflation reached 10.7% in October so it's not just us!
odysseus2000 wrote:This heavy holding of gilts led to the near collapse of the pension industry:
dealtn wrote:odysseus2000 wrote:This heavy holding of gilts led to the near collapse of the pension industry:
No it didn't. Nor did it lead to the near bankruptcy of the Banking industry as you previously claimed.
odysseus2000 wrote:dealtn wrote:odysseus2000 wrote:This heavy holding of gilts led to the near collapse of the pension industry:
No it didn't. Nor did it lead to the near bankruptcy of the Banking industry as you previously claimed.
This was the description put on events by the boe as out lined inr guardian article:
https://www.theguardian.com/business/20 ... t-meltdown
Had the Bank not intervened with a promise to buy up to £65bn of government debt, funds managing money on behalf of pensioners across the country “would have been left with negative net asset value” and cash demands they could not have met.
“As a result, it was likely that these funds would have to begin the process of winding up the following morning,” the Bank said.
The central bank said the meltdown was at risk of rippling through the UK financial system, which could have then caused “excessive and sudden tightening of financing conditions for the real economy”.
Are you saying this is all boe propaganda & didn’t happen or what?
Regards,
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