GDP news must mean that interest rates will remain at 0%?

stutakesphotos

With news that GDP is -0.5%, surely interest rates will remain at 0.5% for a number of months? Thus, those of us who have been wondering whether to fix our mortgage now have a better insight

Jonbvn

1 month's data is not enough to decide.

stutakesphotos

Jonbvn wrote: »

1 month's data is not enough to decide.

Fair point. However it is likely to mean that there will be no interest rate increase for this quarter?

Peelerfart

I'm afraid that's just a crystal ball question. My opinion is no,there won't be an interest rate increase for this quarter.

But hey - what do I know !

brit1234

stutakesphotos wrote: »

With news that GDP is -0.5%, surely interest rates will remain at 0.5% for a number of months?

I hope not after all it was low interest rates over the last decade that was a major cause of this economic mess.

For a healthy economy we need higher rates so people save and that money can then be used to invest.

At the moment low rates are causing high debt, maintaining the housing bubble and leading to massive inflation.

Inflation is the BOE main target, if they don't address it we lose are good credit rating and your mortgage goes up anyway.

Rates have to go up now.

fozzeh

No.

However, I wish it was simple to predict as I am on BR+1.99% so not sure where or what to do.

Thrugelmir

stutakesphotos wrote: »

Fair point. However it is likely to mean that there will be no interest rate increase for this quarter?

Most predictions have suggested latter part of 2011 for a while. Only high inflation figures recently brought this foward.

Interest rates do not control GDP directly. Growth was always going to be sluggish.

silverfoxuk

Thrugelmir wrote: »

Most predictions have suggested latter part of 2011 for a while. Only high inflation figures recently brought this foward.

Interest rates do not control GDP directly. Growth was always going to be sluggish.

I agree although it doesn't seem a great idea to increase the borrowing costs of either businesses (effects on jobs & expansion) or consumers (effects on spending) at the moment.

The other tricky thing is that whilst savers are having a crap time of it at the moment and I do empathise, having savings myself, if you look at the main cause of inflation in the UK just now, its not clear that making money more expensive for UK will have much impact as it is commodity, fuel, VAT etc that are (mainly) causing the rise. Wage rises are flat to 2% so not really inflationary, spending cuts are on the horizon as are major rounds of redundancies from public sector.

I agree it looks unlikely at the moment that rates will rise (much) in the next quarter - half year.

Radiantsoul

Jonbvn wrote: »

1 month's data is not enough to decide.

True, although it is made up of three months of data.