Will Interest Rates stay extremely low for 5 Years?

Emy1501

Generali wrote: »

I disagree for 2 reasons:

- A falling currency can only cause inflation if wages rise otherwise it makes living standards fall, esp in a trading nation like the UK.
- If inflation starts to rise as a result of a falling pound, the MPC will raise rates and the pound will rise again.

Pretty much every item of clothes, every toy for my kids is not made in the UK regardless of whether they are a UK Label or not.

I remember Last year Richer Sounds putting up the prices of their TV's blamming the weaker pound as the reason. This is where I see problems. I cant see how we are not going to see inflation when it seem certain that the pound is going to weaken. Then by all accounts a rise in interest rates would kill the economy.

prowla

These artifically low interest rates have been the foundation of our current economic woes.

dopester

HAMISH_MCTAVISH wrote: »

Well given the circumstances, it is now pretty clear the borrowers have been rewarded for their risk taking, and so have turned out to be prudent.

And it is the overly cautious savers who have been punished for their lack of courage, and turned out to be f eckless.

Reality becomes far clearer with hindsight.....

And you say calling some people 'HPI Sluts' is provocative.

undetterred

leveller2911 wrote: »

All I know is as a saver I'm still bailing out f eckless borrowers,same goes for my elderly neighbours who are struggling since savings rates plummeted.......It seems to me us savers are treated like scum now..........

tough luck,is it a given right to live off savings returns?

Generali

Emy1501 wrote: »

Pretty much every item of clothes, every toy for my kids is not made in the UK regardless of whether they are a UK Label or not.

I remember Last year Richer Sounds putting up the prices of their TV's blamming the weaker pound as the reason. This is where I see problems. I cant see how we are not going to see inflation when it seem certain that the pound is going to weaken. Then by all accounts a rise in interest rates would kill the economy.

My point, possibly not well made, is that these foreign made TVs and clothes will only add to inflation if people can afford to buy them.

If wages fail to rise to match increasing import prices then falling living standards rather than rising inflation results.

chucky

leveller2911 wrote: »

All I know is as a saver I'm still bailing out f eckless borrowers,same goes for my elderly neighbours who are struggling since savings rates plummeted.......It seems to me us savers are treated like scum now..........

you've obviously made the wrong investment choice - look outside holding cash as an investment.

it will make your investment returns much better

Generali

chucky wrote: »

you've obviously made the wrong investment choice - look outside holding cash as an investment.

it will make your investment returns much better

Especially if you're holding Sterling! :eek:

tomterm8

I think anyone predicting rates for the next 5 years is a bit of a fool, to be honest. The nature of things at the moment is in so much flux, I wouldn't be surprised if interest rates go up within 3-6 months. I think the economy in a number of counties is at an inflection point; it is possible we could have a very rapid increase in worldwide growth in Q2. Or, if the recovery fails to take hold, we could all be back to recession. But the rapid growth option is my base scenario.

My guess is that on a worldwide scale, we are at the point where economies policies are gaining traction, and I think growth is going to surprise to the upside pretty much everywhere except europe. I would not be surprised if, even in europe and the UK, there is faster growth than predicted by any of the main thinktanks.

Gee... I'm sounding optomistic today, think I'll have to go back to FT Depressing News blog to cool down.

Snooze

chucky wrote: »

can't see near zero but can see around 2%-3% quite easily

:whistle: :whistle:

chucky

Snooze wrote: »

:whistle: :whistle:

lol - i make a typo and you use it as your post footer a year later... nice one... :eek: