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MSE News: Base rate held at 0.5%

This is the discussion thread for the following MSE News Story:

"The Bank of England today announced it is holding the Base Rate at 0.5% for the tenth consecutive month ..."
Read the full story:
Base rate held at 0.5%


    12:01 10Dec09 BoE leaves asset-buying, rates unchanged as expected

    LONDON, Dec 10 - The Bank of England left its asset purchase programme intact at 200 billion pounds ($325 billion) and held interest rates at 0.5 percent on Thursday, as widely expected.

    Policymakers have indicated they are likely to stay on hold until at least February when they will get their new growth and inflation forecasts and the scheduled asset purchases run out.

    The BoE launched its quantitative easing progressing -- mainly asset-buying of government bonds -- in March in an unprecedented attempt to boost an economy ravaged by a global credit crunch.

    The economy is now showing signs of picking up again, house prices are rising and forward-looking surveys point to an ongoing recovery in activity, suggesting Britain will pull out of recession by the end of the year.

    Most analysts, therefore, expect no further expansion of the QE programme -- which was expanded by 25 billion pounds last month -- and say it could be a while before policymakers feel confident enough about growth to start raising interest rates.
    Please take the time to have a look around my Daughter's website
    (MSE Andrea says ok!)
  • Generali
    Generali Posts: 36,411 Forumite
    Combo Breaker First Post
    Ending QE is a rate rise of sorts as it stops expanding the monetary base and so should lead to lower increases in the money supply than if it was continued. The point of base rate cuts after all is to increase the money supply faster, ultimately.
  • purch
    purch Posts: 9,865 Forumite
    Yes, a case of doing nothing = doing something.
    'In nature, there are neither rewards nor punishments - there are Consequences.'
  • Peelerfart
    Peelerfart Posts: 2,177 Forumite
    First Anniversary Combo Breaker First Post
    Base rate held at 0.5% - Excellent !. Long may it continue
    Space available for rent
  • edgex
    edgex Posts: 4,177 Forumite
    Name Dropper First Anniversary Combo Breaker First Post
    Peelerfart wrote: »
    Base rate held at 0.5% - Excellent !. Long may it continue

    i had my savings account statement come through at the end of november
    the interest earned amounts kept getting smaller & smaller, even as the savings got bigger

    yet without people saving, there would be no money to lend
  • Why did they stop at 0.5% interest rates instead of lowering them to 0%?
  • from

    "With sustainable, significant recovery very far from guaranteed, any policy tightening still looks a long way off and we expect interest rates to stay down at 0.5% until at least late 2010. Indeed, the Bank of England could very well delay raising interest rates until 2011," said Howard Archer at Global Insight.
    What we've got here is....... failure to communicate.
    Some men you just can't reach.
  • PasturesNew
    PasturesNew Posts: 70,698 Forumite
    Name Dropper Photogenic First Anniversary First Post
    "Base rate held at 0.5%"


    "Savers robbed for a further month, so people who over-stretched don't feel the burn of their ways ... and those that hadn't overstretched get to party some more with their free/unexpected money"

  • Is it not more the case that we will be forced to raise rates rather than chose to raise them though? What other motivation is there ever for raising rates?
    CLAPTON Posts: 41,865 Forumite
    Combo Breaker First Post
    Is it not more the case that we will be forced to raise rates rather than chose to raise them though? What other motivation is there ever for raising rates?

    interest rates changes (i.e. those decided by the BoE) whether upwards or downwards are always 'forced' as their purpose is either to defuse excessive demand (i.e. to stop booms and high inflation) or to encourage demand (i.e. when recession threathens)

    so there is no 'idea' or correct rate they are simply one of the government tools to try to maintain 'full' employment and to contain inflation

    in any event they have little relation to CC or unsecured loan APRs but have historically affected mortgage rates
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