PAKISTAN raises interest rates to 15 percent (BBC News)

eeja

So what will most savers reading this say?
'Nothing to do with me. 'I don't live in Pakistan '.
Well it DOES MATTER to us all . Why ?
Because Pakistan has many of the same problems we have, including a rapidly falling currency .
Yet it has been having discussions with the IMF for a bailout loan and one of the conditions the IMF usually imposes is A RAISING OF INTEREST RATES.'' !

'Hold on' you might say...but isn't Gorgon (sic) Brown, Alistair Darling and the Bank of England drastically cutting interest rates in the hope of healing the economy?
EXACTLY
So there we have it two completely opposite remedies to cure the same ill !
WELL they both can't be right, can they ? Give the patient the right remedy he gets better.....give him the wrong one and the patient dies.

So good friends...which remedy is right...lowering interest rates to near zero, pumping unlimited amounts of money into the economy and ignoring the depreciation of your currency
OR doing the exact opposite as Pakistan is now doing under aegis of the IMF ?

tom188

Well they raised interest rates in 1929....

earlgrey_3

eeja wrote: »

So there we have it two completely opposite remedies to cure the same ill !

I think you have completely misunderstood.

Pakistan has raging inflation of 25% (See Bloomberg) while our rate of inflation is forecast to fall to 1% or even lead to deflation i.e. negative inflation.

The two problem are almost exactly opposite and reason the currencies are falling entirely different.

JayTee99_2

the same treatment has been given to Iceland; they appear to be happy with those requirements and are going back to the IMF for more,

this is how they explained it

if you fund your own bailout, then you have a choice of options,
i suppose you could just hand over the money and say spend it wisely, why not set up more savings accounts.
Uk are suckers for them

eeja

earlgrey wrote: »

I think you have completely misunderstood.

Pakistan has raging inflation of 25% (See Bloomberg) while our rate of inflation is forecast to fall to 1% or even lead to deflation i.e. negative inflation.

The two problem are almost exactly opposite and reason the currencies are falling entirely different.

..................................Response................................................
UK inflation the many highest in years at 5 plus percent . If the pound keeps on sliding the way it is doing with a significant drop in its value almost every day lately, the price of imports on which we rely ie petrol will start to rise significantly.
So to sum up. The government have stated clearly that they are ignoring price inflation totally and going for growth hence the slashing of interest rates. They do not give a toss about the value of our currency only getting more votes at the next election and retaining power
ps Denmark put up interest rates last week and had no inflation problem. They did it to maintain the value of their currency against the euro despite the same problem the UK has.

JayTee99_2

eeja wrote: »

ps Denmark put up interest rates last week and had no inflation problem. They did it to maintain the value of their currency against the euro despite the same problem the UK has.

Denmark Lowers Benchmark Rate to 5%, Tracking ECB Cut

Aegis

powerRIP wrote: »

Does this forum have an ignore poster facility? It's getting a bit repetitive now.

You can view someone's public profile and use the "Add user to Ignore List" link below their username and above their details.

mrposhman

eeja wrote: »

..................................Response................................................
UK inflation the many highest in years at 5 plus percent . If the pound keeps on sliding the way it is doing with a significant drop in its value almost every day lately, the price of imports on which we rely ie petrol will start to rise significantly.
So to sum up. The government have stated clearly that they are ignoring price inflation totally and going for growth hence the slashing of interest rates. They do not give a toss about the value of our currency only getting more votes at the next election and retaining power
ps Denmark put up interest rates last week and had no inflation problem. They did it to maintain the value of their currency against the euro despite the same problem the UK has.

In your view which is clearly flawed as a previous poster has shown a reduction in rates in denmark, you are ignoring unemployment.

We pay relatively decent sums in comparison to some for unemployment benefit and this has to be funded from somewhere. As the government didn't think about the rainy day we are seeing now, this has to be funded out of current taxes, extra borrowing or we try to avoid it getting to its worse by encouraging growth and getting more and more people back in work.

Why do you think the tories are calling for reductions in corporation taxes and the other policy cameron brought up earlier in the week about providing NI benefits to employees who employ those who are unemployed??

The cost of these reductions will be outweighed by the benefits that growth and lower unemployment provide.