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 Post subject: Beginning of the end for low interest rates
PostPosted: Thu Jan 05, 2017 2:06 pm 
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Of Systemic Importance

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This all seems to be happening a bit sooner than was expected.
Good for German savers, not so good for heavily indebted Irish mortgage holders

Germans say time has come for higher interest rates
The ECB is now in a position to ‘normalise’ monetary policy, economists say
http://www.irishtimes.com/business/econ ... -1.2926401
Quote:
German economists called on the European Central Bank on Thursday to raise interest rates after euro zone consumer prices rose faster than expected in December.
Inflation in the 19 countries sharing the euro increased an annual 1.1 percent last month, data showed on Wednesday, stirring a fear of inflation among German that goes back to the 1920s. The ECB aims for inflation of just under 2 per cent, but it has undershot its target for years. To fight off deflation, the central bank has cut interest rates to zero and pumped more than a trillion euros into the economy through a bond-buying programme.
“It is time for a normalisation (of monetary policy),” Stefan Bielmeier, the chief economist at DZ Bank, told the newspaper Bild.
“Now a change in interest rates is doable.”
DIW institute chief Marcel Fratzscher told Bild: “The sooner the inflation rate in Europe reaches the goal of 2 per cent, the quicker the ECB can raise interest rates. Savers would also benefit from this.”
Isabel Schnabel, one of the panel of economists that advises chancellor Angela Merkel’s government, said an end to ultra-expansive monetary policy should come soon, Bild reported....


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 Post subject: Re: Beginning of the end for low interest rates
PostPosted: Thu Jan 05, 2017 3:30 pm 
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Too Big to Fail
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1.1% inflation now doesn't mean it will hit the 2% target any time soon...


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 Post subject: Re: Beginning of the end for low interest rates
PostPosted: Thu Jan 05, 2017 5:05 pm 
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Doesn't have to hit the 2%. All it takes is enough influential Germans saying it should happen


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 Post subject: Re: Beginning of the end for low interest rates
PostPosted: Thu Jan 05, 2017 5:08 pm 
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FreeFallin wrote:
Doesn't have to hit the 2%. All it takes is enough influential Germans saying it should happen

The Germans have been whining about ZIRP since it was a thing. This is nothing new.

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 Post subject: Re: Beginning of the end for low interest rates
PostPosted: Thu Jan 05, 2017 5:21 pm 
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Eschatologist wrote:
FreeFallin wrote:
Doesn't have to hit the 2%. All it takes is enough influential Germans saying it should happen

The Germans have been whining about ZIRP since it was a thing. This is nothing new.


Yes. There's another thread or two on here somewhere from a few years back. I'll see if I can dig it up.

Edit: I think most are littered in the ECB watch thread but here was one about German House price inflation leading to upward pressure on interest rates back in 2012
viewtopic.php?f=4&t=44057

There have been similar threads but I'm done digging for now.

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 Post subject: Re: Beginning of the end for low interest rates
PostPosted: Thu Jan 05, 2017 6:36 pm 
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The monthly jump in many German states was huge, like 0.7 above expectations. You know, on things like food and energy. Not to be ignored.

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 Post subject: Re: Beginning of the end for low interest rates
PostPosted: Thu Jan 05, 2017 6:38 pm 
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Neo Landlord

Joined: Nov 30, 2011
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There will be no increase in Euro Zone interest rates this year , given the elections in France and Germany and the general anti europe response a rise in rates would evoke in many of the other countries.


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 Post subject: Re: Beginning of the end for low interest rates
PostPosted: Fri Jan 06, 2017 9:52 pm 
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FreeFallin wrote:
This all seems to be happening a bit sooner than was expected.
.
[/quote]
Really?

7 years later rates are still rock bottom
'Many' on here and certain economists were expecting hyperinflation and high interest rates long ago.
Some people said they would stay low for 5 to 10. :x

I'd be surprised if rates rise soon or quickly without some europe wide or at least German fiscal stimulus
US has been talking about it but very slow progress so far. Trump is a loose cannon, with no understanding of economics so it will be an interesting few years

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 Post subject: Re: Beginning of the end for low interest rates
PostPosted: Fri Jan 06, 2017 9:55 pm 
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Eschatologist wrote:
FreeFallin wrote:
Doesn't have to hit the 2%. All it takes is enough influential Germans saying it should happen

The Germans have been whining about ZIRP since it was a thing. This is nothing new.

Correct, Germany has a lot of interest but can't dictate EU interest rates.

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An increase in the number of paupers does not broaden the market. M. Kalecki


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 Post subject: Re: Beginning of the end for low interest rates
PostPosted: Sun Jan 08, 2017 10:37 am 
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In Ireland, base rates could rise and retail rates could fall if banks' massive margins can be reduced due to:

-extra competition
-greater ease in securing collateral

I wouldn't hold my breath on either though.


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 Post subject: Re: Beginning of the end for low interest rates
PostPosted: Fri Mar 17, 2017 11:55 pm 
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First signs of a change of mood music from the ECB?

ECB to decide later whether to raise rates or end QE first


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