Interest rates could stay at 0.5% throughout 2011

Graham_Devon

...and maybe even into 2012.

And more interestingly...

"Mr King also indicated that if the recovery does falter markedly, the Bank of England can take further action to stimulate the economy, helped by credible monetary policy. He made no reference to inflation, preferring to focus on what the Bank of England can do to help the economy going forward.

http://www.guardian.co.uk/money/2010/sep/15/interest-rates-low-2011

chucky

Interest rates could stay at 0.5% throughout 2011
...and maybe even into 2012.

of course they can - he's been saying it for ages and people on here too. it makes perfect sense.

QE won't be the only option that they have to try an stimulate the economy.

lemonjelly

I didn't realise there was any doubt they wouldn't?

Many have anticipated QE would have re-occured already.

Which is another thing I don't understand about all these posts suggesting IR's will rocket. Prior to that, surely the BoE will reverse QE & withdraw that money from the system (if inflation is the risk).

chucky

lemonjelly wrote: »

I didn't realise there was any doubt they wouldn't?

Many have anticipated QE would have re-occured already.

Which is another thing I don't understand about all these posts suggesting IR's will rocket. Prior to that, surely the BoE will reverse QE & withdraw that money from the system (if inflation is the risk).

that's just the nutters on here - they don't really understand or they blind themselves into wishing something and they then believe it will happen...

tomterm8

lemonjelly wrote: »

Which is another thing I don't understand about all these posts suggesting IR's will rocket. Prior to that, surely the BoE will reverse QE & withdraw that money from the system (if inflation is the risk).

I'm not convinced the BoE will ever reverse QE, except as far as draining excess reserves.

phil_b_2

Announcment: House price crash cancelled until further notice.

Thrugelmir

lemonjelly wrote: »

Which is another thing I don't understand about all these posts suggesting IR's will rocket. Prior to that, surely the BoE will reverse QE & withdraw that money from the system (if inflation is the risk).

Majority of the liquidity injected by the BOE into the system using QE was the purchasing of Government Gilts with a sub 2 year to maturity time frame.

So at some point of time. The Gilts would have matured and the cash put back in the system to circulate in any event. The balance in Corporate bonds can be cancelled as the bonds mature and the BOE receive the proceeds.

Therefore the BOE can bide its time, and repurchase another tranche of Government debt to maintain liquidity in the banking system if necessary.

The constraints on bank lending (and globally recapitalisation) will act as a natural market force on interest rates. The BOE can sit back and watch as market forces progressively move rates upwards.

marklv

Graham_Devon wrote: »

...and maybe even into 2012.

And more interestingly...



http://www.guardian.co.uk/money/2010/sep/15/interest-rates-low-2011

Utter nonsense. This is all designed to cause rampant inflation in order to make the debt go away. Expect 10% inflation soon.

The savings and retirement hopes of millions will go up in flames. :mad:

The only way to stimulate the economy is INVESTMENT!

Sibley

Well I for one will be delighted if interest rates stay low.
I paid a lump off my mortgage by overpaying the first year and now I'm enjoying the new low rate. This is how it ought to be not just paying over the odds interest. It can continue until the end of my term as far as I'm concerned. I think we were all guilty of overextending ourselves on easy credit. This has been a chance to get straight. I took it and hope you all have.

Generali

marklv wrote: »

Utter nonsense. This is all designed to cause rampant inflation in order to make the debt go away. Expect 10% inflation soon.

The savings and retirement hopes of millions will go up in flames. :mad:

The only way to stimulate the economy is INVESTMENT!

The Bank of England can't invest as it sets monetary policy, it isn't an investment company.

What it can do is set monetary policy in such a way as to encourage investment. That means keeping rates as low as possible that is commensurate with keeping inflation low. The lower rates are, the more companies are able and willing to invest.

IveSeenTheLight

marklv wrote: »

Utter nonsense. This is all designed to cause rampant inflation in order to make the debt go away. Expect 10% inflation soon.

If that's so, given we have had a number of months a bR 0.5%, why is RPI and CPI lowering?