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BoE Slashes Interest Rates 150 Basis Points

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By Barry Ritholtz - November 6th, 2008, 7:29AM

Wow, back to 1954:

The Bank of England unexpectedly slashed the benchmark interest rate by 1.5 percentage points as policy makers tried to contain the damage caused by a recession.

The nine-member Monetary Policy Committee, led by Governor Mervyn King, slashed the bank rate to 3 percent. The move was predicted by none of the 60 economists in a Bloomberg News survey. The pound plunged as much as 1.1 percent to $1.5722.

Dollar rally should hurt Oil and Gold today . . .

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Source:
Bank of England Slashes Key Rate by One Third to 3%
Jennifer Ryan
Bloomberg, November 6 2008

http://www.bloomberg.com/apps/news?pid=20601087&sid=aG9gbrS0K2b4&

PERMALINK

13 Responses to “BoE Slashes Interest Rates 150 Basis Points”

  1. Mike in Nola Says:
    November 6th, 2008 at 8:50 am

    Trichet on CNBC.com video right now. As always, Frau Wadhwa asks a good question proding him about future cuts.

  2. Katie Says:
    November 6th, 2008 at 9:10 am

    Or maybe gold will finally acknowledge that the race to the bottom has begun.

  3. leftback Says:
    November 6th, 2008 at 10:01 am

    I certainly expected to see weakness in gold today, Barry. The fact that we did not see weakness is extremely interesting, don’t you think? Katie may have a point. The gap between the physical market and the paper market can fill surprisingly quickly.

  4. slappy Says:
    November 6th, 2008 at 10:18 am

    gold up 14
    all this liquidity has to go somewhere
    smart people are buying gold

  5. devil_futility Says:
    November 6th, 2008 at 11:33 am

    So, I know Jim Cramer is not liked on this site, but if everyone was going to make big interest rate cuts shouldn’t they have done so more aggressively like he wanted?

  6. Pat G. Says:
    November 6th, 2008 at 11:56 am

    “unexpectedly” There’s that word again. In addition, the ECB, Swiss and Denmark cut rates. Katie’s point is spot on…” the race to the bottom has begun”…for world currencies. Precious metals, especially silver due to the physical shortage are screaming buys right here. Not trying to persuade anybody just making a point.

  7. Mark E Hoffer Says:
    November 6th, 2008 at 12:15 pm

    I’d like to understand what the prevailing take is on ‘Bretton Woods II’–

    past that, to Katie’s point, I think the PMs, in the physical market, have started to pick up on “the race to the bottom”, the paper PM ‘markets’, specifically COMEX, seems ready to stand for a major stress-test basis the Dec. contracts..

  8. Pat G. Says:
    November 6th, 2008 at 12:46 pm

    Hey Mark, I don’t think HR6690 gets passed. The horse has already left the barn. Targeting gold to firm the dollar is more manipulation. What’s happening in the Comex is that contractees are taking delivery then selling it (at a rather handsome profit) in the physical markets. The paper price is much lower than the “actual” physical price and that won’t last forever. That will be one hell of a short squeeze.

  9. Mark E Hoffer Says:
    November 6th, 2008 at 12:56 pm

    Pat,

    I had forgotten about Poe’s 6690, I agree, more manipulation is not what’s needed.

    I was referring to this:
    http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Bretton+Woods+II
    idea, in general.

    http://www.eurodad.org/whatsnew/articles.aspx?id=3008
    more specifically, gives an intro. outline..

  10. ReturnFreeRisk Says:
    November 6th, 2008 at 2:57 pm

    Good old fashioned, red-blooded, massively moral hazard inducing 150 bp rate cut. Way to go BOE !!! This is exactly what is needed. No idea if it will help. Proabably not.

  11. Pat G. Says:
    November 6th, 2008 at 4:53 pm

    Hey Mark sorry for the delay but we had a power failure. I think Poe’s introduction of HR6690 is the beginning of a coordinated effort by the G7 to reign in the price of gold by using the weak dollar as its excuse ahead of Bretton Woods II. I don’t see these actions as mutually exclusive. I could be wrong.

  12. Mark E Hoffer Says:
    November 6th, 2008 at 5:24 pm

    Pat,

    I hear ya, I’ll have to think about that some..

    Though, to me, I think BW II would make for a good TBP post..

    Past that, with those power failures, remember, it’s always helpful to have more than a few candles~..

  13. Pat G. Says:
    November 6th, 2008 at 6:55 pm

    I agree. BW II would make a great TBP thread. Got plenty of candles. Need infrastructure. I’ve heard I might get some. LOL