Rate rises on way ??

I wouldnt count on it.

Attempts to induce inflation through QE have provided pretty dismal results so far.
I read a report recently that Irish households ratio of loans to deposits is 0.9, meaning that competitive lending rates could be on the way for Irish borrowers.
The article talks about 'late 2019' before anything happening with regard rate rises...considering eurozone inflation rate is starting to lag again, its a very presumptuos call, imo.
 
I agree with TheBigShort, the ECB will have to withdraw its non standard monetary policy very slowly (allowable collateral used in main refinancing operations) before standard monetary policy (such as interest rate increases) can be implemented. Future guidance remarks from the ECB will be essential so as not to spook the markets or banks.
 
"Europe will follow. In-between two and three years' time, you may be able to get 2pc interest paid on savings accounts in Ireland."

Given this statement, is it daft to invest in the 10 year state savings but instead go for a 3/4 year one and see what products are on offer then?
 
Very smart people have been saying for a long time that the state savings were for people who didn't know too much about investing. I haven't paid too much attention to them for the past few years and have happily and gainfully been rewarded with investments in the State Savings. Pick the wrong stocks and lose your money, invest in funds and pay big fees with no guarantees at all of profits. Invest in a live monkey, let him/her stick a pin on a list of stocks and it will more than likely beat financial advisers predictions. This has happened and the monkey has won. So there you go. Always go with your own hunch, it's seldom wrong.
 
My guess is that the ECB will act very slow on rate increases.

Interestingly in the US, as the FED has raised rates, retail deposit rates have only very slightly increased, as banks have excess deposits. The same could easily happen here if the ECB raiser rates.
 
Trying to predict interest rate movements is pretty close to the definition of insanity.

Mind you, @CiaranT is absolutely right to suggest that any eventual ECB policy rate changes may not necessarily translate into short-term deposit or mortgage rate changes. Irish banks are currently operating at a loan-to-deposit ratio of around 90% - there is plenty of slack in the system.
 
So essentially the reasons for historically low interest rates are all good, basically a glut of money chasing too few assets. Frankly I dont buy this explanation, if there was a glut of money surely it would show up in inflation rates. I actually think inflation rates are in reality much higher but lots of things are not counted in inflation rates, deliberately so. Therefore central banks are keeping interest rate low so as not to pop the bond market. There is a good site showing the value of all global assets in squares, so one square corresponds to 100billion dollars. The big take away from this is how enormous the global debt and global derivatives markets are compared to everything else. There is an argument about whether derivatives should really be included as they are bets not assets , its only when the bet is liquidated that the winner of the bet has an asset and the asset just changes ownership.
http://money.visualcapitalist.com/worlds-money-markets-one-visualization-2017/

There is much publicity about the stock market bubble recently, but when you look at the paltry size of the global stock markets against everything else especially the bond market you would wonder. The global debt market has tripled in the last 15 years whereas the global stock market is still not much different to 15 years ago in capitalization. Another take away is how small the value of the precious metal markets are now considering that precious metals were the money supply a century ago.
 
Don't be surprised to see the EU change the methodology by which they calculate inflation. The Germans are bursting their gut to increase interest rates and for all intents and purposes they run the EU. Once inflation gets to anywhere near the 2% mark then expect the balloon to start inflating, inflation will be given a helping hand very soon, just wait and see.
 
Back
Top