Is lowering the BoE furhter going to help?

cbrpaul

My question here is , does lowering the BoE below a certain percent say 3%actually help the economy recover.

So lets see, lower rates may incourage more people to apply for mortgages to buy houses ,well the banks realise that rates WILL go up again , so if they lend to people who can afford rates now , then when rates rise what happens, I think they have learnt their lessons there !!!, to stop this they will have strict criteria in place such as LTV,s and income levels applied much more strictly that before.

Existing borrowers, most of which are paying well over the current 0.05% BoE rate anyway, with the excpetion of some trackers of course

Savers, they are getting terrible returns right now , so they will be thinking we need to keep it there and not spend it, lock it away it away and keep it there for now.

I feel after a certain percentage drop, reducing the BoE further doesn’t actually help the situation it merely looks good for the government, and if anything, only slows up the process of getting us out of recession !!

One thing you can be sure of , the banks and BS's AND the government who have put billions of our money into the "system" will want the money rolling back in again ASAP !!!

When this happens you can bet yourselfs we will be paying for it one way or another !!!

GOOD LUCK to us all !!!

maveli

As I said in another post, lowering the interest rate is not to help people. It is to help banks and other financial institution to get money cheaply and lend it to people with a good margin. If you look at all those action taken by government they are all aimed at banks and othe financial institution. "People" are no where in their rescue plan.

Matty0682

I still struggle to how is the BOE base rate reduction will achieve much......this surely will only lead to inflation and contribute to the mess we are already in

Lets remember that the BOE is the lender of last resort, therefore banks and institutions will not go to the BOE unless they absolutely have to. If they do, it sends to a massive cry for help the market for that institution.

Therefore as bank/institutions aren’t benefiting from this BOE rate, they are less likely to cut their own rates and start lending again.
It is LIBOR what drives this, and until confidence is restored between banks, LIBOR will remain high, and therefore bank’s funding will remain high.

What is interesting though is the “quantitative easing” where the BOE buys Gov & Corporate Debt to inject some liquidity in the market. Will this encourage lending? Perhaps it will. Or is this probably throwing good money after bad? as the underlying financial system is still the same

hearts

Certainly helps me ;-)

Robert_Sterling_3

My assumption is that in the long run it will help.
That is not to say that we will all be better off in the long run.
We do not know what the future holds.