BOE Rates hit 1.5%

MrDT

RainMaker wrote: »

I don't think savers have much to complain about. The absolute savings rate isn't important, it's the rate relative to inflation that matters. E.g, savings rate at 5%, inflation running at 5%, is exactly the same as a savings rate of 1% with inflation running at 1%.

CPI is dropping like a stone, and may actually go negative this year, hence reducing interest rates.

Hurrah! I can buy a 'basket' of crap for very little more than last year. I really want that new laptop, and that's cheap, so good stuff there. I need food and warmth, they're more expensive than last year, but it all balances out if I buy the whole 'basket' right? I have to pay council tax, that's not in my 'basket', the fact that it rises at a percentage massively over CPI makes no odds obviously.

How about if I'm skint and can't afford everything in the basket? I decide to keep the food and warmth, but won't buy the laptop. !!!!, my personal inflation rate seems to be rising far more than the 1% the bank pays on my savings...

CPI is a pretty meaningless measure.

Really2

MrDT wrote: »

Hurrah! I can buy a 'basket' of crap for very little more than last year. .

Does that not mean then you can save more than last year? Thus equalising what you lose in interest.

If you are skint you won't be saving, so your saving rate is irrelevent?

RainMaker_2

MrDT wrote: »

my personal inflation rate seems to be rising far more than the 1% the bank pays on my savings...

CPI is a pretty meaningless measure.

Everyone has a different personal inflation rate, depending on what exactly you spend your money on. You can check yours out here;

http://www.statistics.gov.uk/PIC/index.html

CPI isn't perfect, but it's also not meaningless.

WTF?_2

RainMaker wrote: »

Everyone has a different personal inflation rate, depending on what exactly you spend your money on. You can check yours out here;

http://www.statistics.gov.uk/PIC/index.html

CPI isn't perfect, but it's also not meaningless.

Indeed - it was really useful as an excuse to keep interest rates low when they should have been much higher.

neverdespairgirl

Really2 wrote: »

If you are skint you won't be saving, so your saving rate is irrelevent?

Not true. You might have savings, but not be saving.

Really2

neverdespairgirl wrote: »

Not true. You might have savings, but not be saving.

Just going of the OP comment.
Skint to me means no money, I would not class my self skint if I had savings.

"skint
Adjective
Slang without money, [variant of skinned] "

purch

Doubt it will mean much though!!

Well you managed to spark a thread with 120 reples !!!!! :eek:

aardvaak

People with mortgages are debtors (all be it agreed debtors)

People with savings are prudent and their monies get lent out to debtors.

So why do people look down their noses at people with savings who are just trying to get a decent return on their monies as an income to live.

MrDT

Really2 wrote: »

Does that not mean then you can save more than last year? Thus equalising what you lose in interest.

No, because inflation of 1% means things cost more than they did last year. If you're living on a fixed income, are subject to a pay freeze, or have had to take a pay cut you can no way save more than last year.

If we pretend that we're still living in a land of wage inflation then yes, you can save more if you buy the whole basket. You would need to buy both the necessessities and the frivolities.

Really2 wrote: »

If you are skint you won't be saving, so your saving rate is irrelevent?

Ok, skint may not have been the best wording. Let's say this year you have no 'left over' money, but have a stack in the bank. This year you can't buy the tat, you have to pare spending right back to buying just the essentials. Is the savings rate irrelevant? No. Are you going to starve? No, since you can still draw on the capital - but the rate is far from irrelevant.

Really2

MrDT wrote: »

No, because inflation of 1% means things cost more than they did last year. If you're living on a fixed income, are subject to a pay freeze, or have had to take a pay cut you can no way save more than last year.
.

I won't carry it any further as you could have 1% inflation 4% pay rise.
We could argue anything to suit circumstance.
The truth is rates are coming down to help business and stave off deflation.