another rate cut due next week?

LesU

gozomark wrote: »

base rate is set on expected not historic inflation - RPI is likely to be -2% by the Summer. CPI is likely to be 0%.

RPI has only dived because of the massive cuts in the base rate, which has impacted mortgage repayments. The BoE only has 1.5% to play with now, we are not going to see anything like those reductions again, because they can't be done. The next few months will see that short, sharp shock disappear from the figures. I'm watching the CPI /RPIX for my inflation guide.
Normally I'd have been looking at RPI, but BoE rate cuts have distorted the whole scene.

EalingSaver

LesU wrote: »

It depends how you view inflation.
RPI - Sep 5%, Oct 4.2%, Nov 3% ,Dec 0.9%
What that tells me is in the last 4 months prices have risen more than they were a year ago, but that rise is decreasing. But prices in December were still 0.9% higher than a year ago.
What if you don't have a mortgage?
RPIX - Sep 5.5%, Oct 4.7%, Nov 3.9%, Dec 2.8%

So, if you don't have a significant mortgage, prices are 2.8% higher than 12 months ago.

On both CPI and RPI prices are higher than they were a year ago, clearly, as the indices are still positive. But don't mistake this for thinking that prices are still rising but at a slower rate. Because you are looking at the 12 month change. For trend look more at the Q or monthly figures of the actual indices. On that basis the CPI prices have actually been decreasing since Oct and likewiese RPI.

oldandgrumpy

I bet the council tax rises will be 5% +, to keep up with inflation......last October's inflation, that is.

Barneysmom

If it goes to zero, if Alistair Darling prints off £50mill, will the rates go straight back up again?

gozomark

Barneysmom wrote: »

If it goes to zero, if Alistair Darling prints off £50mill, will the rates go straight back up again?

given that the outstanding amount of notes and coins is about £ 52 billion, no

Barneysmom

Thanks Gozomark, I'm a complete dummy about things like this.

equitydealer

0.25% cut in Feb, followed by another 0.25% before the summer.

I don't see the rate falling below 1%.

ChuckCash

newsaver2008 wrote: »

However I shouldn't think the banks would pass this on to savers by now as I should think deposit interest rates have gone as low as they can really.

I really hope you're right. I suspect that many institutions will not be passing on any new cut to mortgage holders, at least not in full. However for savers there seems to be no limit. In fact some savings accounts received a January cut of >0.5%

juicyjude

Yes I hope youre right as well. They need our money, savers are just been treated abysmally

Decadent_Fool

juicyjude wrote: »

Yes I hope youre right as well. They need our money, savers are just been treated abysmally

Okay, at the risk of being devils advocate, why do they? It was the fact that lending exceeded deposits that contributed to the current crises (how much is a matter of opinion), and with Government funding they don't need you.

That said, I'm not disagreeing with you that savers have had it in the neck, but that's why I'd rather invest than save...and I think that's what the BoE want you to do too.