Will interest rates be cut still further in the UK?

lisyloo

Here is what the experts think

http://www.thisismoney.co.uk/interest-rates

Rates coming down to 0.5%.

fatpig_2

Interest rates might go to zero. It's just going to make things worse though. Take the medicine Broon and stop whinging.

sabretoothtigger

They wont go to zero or they risk destroying the (short term) credit system which I dont think is their intention


The laffer curve* is the idea that decreasing taxes can increase the revenue produced. This idea probably ranks alongside the idea of spending more when the country is doing worse, it seems totally wrong and could quite easily fail hence why I'd have to agree interest rates of the early 90's will return in the coming years

Iceland is at 15% at the moment I think, they have no leeway and cannot float the fancy ideas mentioned above. Eventually we may have no choice either, thats how it is afaik



Laffer is reagens former advisor, the guy who laughed at the idea of a crash, peter schiff and others who warned against poor credit lending

Generali

neverdespairgirl wrote: »

Do you think this will happen in the UK too?

In the short term, yes. Longer term the price of money will have to rise as Governments want to borrow more money and so will have to pay more.

The only way rates won't rise as the requirement to borrow more kicks in is if the Government borrows the cash without actually selling any Gilts (bonds) in the market. That is the mechanism for the Government to print money and is a very dangerous path to go down.

free4440273

^which is what the Fed is doing (printing money), although they deny it.

puddy

i got a fixed rate nearly 2 years ago for 10 years at 4.99, just recently it has seemed quite high considering the recent drops, but at least i know what im paying. if rates go up to high levels i will be really pleased i did. however, for banks to be charging about 4% now sounds a bit of a rip off to me, shouldnt it be lower?

mr_jetlag

jenner wrote: »

i got a fixed rate nearly 2 years ago for 10 years at 4.99, just recently it has seemed quite high considering the recent drops, but at least i know what im paying. if rates go up to high levels i will be really pleased i did. however, for banks to be charging about 4% now sounds a bit of a rip off to me, shouldnt it be lower?

Not really, the 3-month Libor rate (at which banks lend to each other) is 3.11%, so at 4% the margin is under 1% for a fixed mortgage.

As to where rates will be, I believe we will see 1% next year but no lower, then when inflation bites due to the shenanigans of this government, it will rocket up to 5 or 6% again after the next election.

puddy

how come libor is so high in comparison with the BoE rate? (simple explanation please, Im blonde)

WTF?_2

jenner wrote: »

how come libor is so high in comparison with the BoE rate? (simple explanation please, Im blonde)

Because LIBOR reflects the real cost of borrowing (i.e. the risk of default and the availability of sources of funding) which has become detached from the fairtytale land of central bank committees.

free4440273

jenner wrote: »

how come libor is so high in comparison with the BoE rate? (simple explanation please, Im blonde)

...in addition, absolute lack of trust between banks; no 'liquidity' in the market; banks hoarding capital in case of further tape bombs: to wit, BofE rate is almost immaterial (ditto Fed funds rate).