BOE cut to o.5%

blued

It's getting boring now :insert yawn smiley:

I get the feeling the BBC cant come up with exciting headlines for it either

"The Bank of England has cut interest rates to 0.5% - a fresh all-time low - and says it will now boost the money supply to help revive the economy."

http://news.bbc.co.uk/1/hi/business/7925620.stm

itsnever2lateisit?

I suppose that is the end of 'free banking'

ad9898_3

itsnever2lateisit? wrote: »

I suppose that is the end of 'free banking'

As long as you have a credit balance, banking is/was never free, they are using your money to make themselves money, whilst paying you less interest than on their 'loans', or in most cases, no interest at all.

setmefree2

chucky wrote: »

simple answer is to change investment vehicle

Yup - they should have bought into UK gilts;)

StevieJ

ad9898 wrote: »

As long as you have a credit balance, banking is/was never free, they are using your money to make themselves money, whilst paying you less interest than on their 'loans', or in most cases, no interest at all.

Unless you have fixed interest savings from last year and currently a tracker mortgage

before_hollywood

ad9898 wrote: »

As long as you have a credit balance, banking is/was never free, they are using your money to make themselves money, whilst paying you less interest than on their 'loans', or in most cases, no interest at all.

makes me wince at the thought of all those people being paid 0-3% on savings that were used to lend others money at 15-20% less than a decade ago :eek:

jay3_2

ad9898 wrote: »

I wonder if it will have the same effect as the other rate cuts, the VAT cut etc.., i.e. nothing, Brown wants us to spend but these kinds of decisions make me tighten the purse strings even more, and I'm sure it's the same for millions of others, especially pensioners.

It's beneficial for a proportion of mortgage holders on trackers, however I would hazard a guess that many of these will be using the opportunity to pay down debt/mortgage, so not spending anymore.

Another act of futility by the BoE/government. The hole is very deep now, I wonder when they will stop digging, obviously not yet.

Genuinely asking this for information: what would you do, policy-wise? I'm very sceptical that these measures will work, at least in the short to medium, but I'm b***ered if I know what the alternative is? I suppose we could do nothing and let events run their course, but that feels like a bad option...

ES10

Admitting the problem is part of the solution
The Bank of England has admitted that cutting the base rate is largely pointless and the real effect may actually be opposite to what it had intended.
"It seemed unlikely that the inflation target could be met solely by cutting Bank [of England base] rate," the MPC admitted in the minutes of its last meeting.
"There might even be a point at which further cuts in Bank [of England base] rate could have an adverse impact on the economy," the minutes added.
The MPC pointed out that this was because banks liked to keep a gap between savings rates and lending rates, which is how they make money. Once rates on savings hit zero (as many already have) any cuts in interest rates make it harder for banks to make a profit.
This is made worse as in several cases (for example with tracker mortgages) banks are forced to pass on cuts in the UK base rate. If savings rates cannot come down to compensate, cuts in the base rate mean banks make less money. And that could make the banks even less likely to lend to consumers and businesses.

- And yet they still cut the base rate again this month ??? - can anyone explain the reasoning behind this latest cut given the above statement from the BOE ...because I'm at a loss to understand why?

mewbie_2

Really2 wrote: »

I am .99% now:o

I new rates were going to go down but I thoght BOE lowest was going to ne 1.5% giving me 1.99%.

I owe mewbie one he said if I did not take the liftime tracker offer I would be kicking myself in a few months.

He was right, i would have been.

I'm very pleased you are happy but alarmed that anyone might take notice of my random ramblings.

Rates will shoot up again at some stage though.

dervish

setmefree2 wrote: »

Yup - they should have bought into UK gilts;)

Thanks.

Where can I find out a abit more about gilts please?