Interest Rate Cuts... Will it help?

Austin_Allegro

purch wrote: »

0207 601 4444

ask for Merv

:rotfl: :rotfl: :rotfl:

'Sorry, Merv can't come to the phone right now. He's tinkering with an old printing press in the basement and has ink all over his hands....'

purch

but also drop our grandchildren into the debt bubble

They've been in it for years.............probably since before we were born !!!!

Lokolo

pickles110564 wrote: »

It is people like you why the country is in such a mess, if you had spend instead of saving we would not be in this recession.

No its people borrowing too much that we are in a recession, duh. Thats why we save.... so we don't get 100% mortgages and borrow loads....

And for retirement...

And for a car....

And for many other wonderful things.

Snooze

pickles110564 wrote: »

It is people like you why the country is in such a mess, if you had spend instead of saving we would not be in this recession.

:rotfl: :T :rotfl: :T :rotfl: :T

That's the most ridiculous post I've ever read on these forums. :rolleyes:

Rob

free4440273

GBP/USD UP on the BofE news; EUR/USD Down on ecb news. There u have it: forex fundamentals :rolleyes:

Kenny4315

There's another £117.50 per month in the bank. :money:

Plus £26,600 capital gain, according to the 'ALIFAX. :money:

WTF?_2

MRSTITTLEMOUSE wrote: »

I was being serious,what is it trying to achieve by keep reducing the interest rates.

By making money cheaper to borrow they are hoping to stimulate borrowing. This should help business activity (cheaper to borrow money to expand or for day to day operations) and encourage consumers to borrow to buy expensive stuff, increasing consumer demand.

It should also provide relief for the indebted, perhaps freeing up the cash for discretionary spending.

It has the effect of weakening the pound too - which should help exporters.


Downsides: Savers get bog all returns - and the all-time low rate of savings is a major factor behind the lack of credit now. Imports get more expensive, pushing up prices and lowering living standards, there isn't much of an export market to benefit from the weaker pound and consumers are so heavily in debt already that they don't want to take on more in these uncertain times - irrespective of how cheap it is.

Plus, they're now so lax with the money supply that should they succeed in inducing another debt-fuelled consumer spending spree we could see a massive amount of money being dumped into the markets very quickly, stoking inflation extremely strongly. This would put downward pressure on bond yields and results in interest rates shooting up 12-18 months down the line.

IveSeenTheLight

I'm now paying off an extra circa £350 per month onto one of my mortgages, simply by keeping the rate as it was when the BoE was 5.5%.

Every three months now is an extra grand paid off my mortgage and that is just me.
Multiply this by all the other tracker mortgages who opt to maintain mortgages and we are paying thousands of pounds each month to help re-liquify the banks
Okay Okay, the banks would have been getting this money anyway, but it does help to reduce the LTV ratio and thus lower the risk to the banks for these mortgages.

Generali

MRSTITTLEMOUSE wrote: »

I was being serious,what is it trying to achieve by keep reducing the interest rates.

When a company looks to invest in a particular project they weigh up costs vs benefits. A big part of costs will be interest. If interest rates fall then more new projects will be viable and so more people will be employed to work on those projects.

Also, if interest rates are low, more people will borrow to consume and fewer will save meaning more people will have jobs.

purch

By making money cheaper to borrow they are hoping to stimulate borrowing

if interest rates are low, more people will borrow to consume and fewer will save meaning more people will have jobs

Actually I think the real reason is that they sit around in their nice conference room, and they really want to DO SOMETHING to help, and cutting interest rates is the only ammo they have !!!!