Not raising rates is damaging the economy

Jimmy_31

HAMISH_MCTAVISH wrote: »

Not the question a person confident prices will continue to fall would ask....

Plenty of repos coming up hamish.

Really2

Jimmy_31 wrote: »

Ive got savings and would like to see interest rates rise and im not over 50, im not really saving towards a better lifestyle i just want to put a roof over my head and these low rates are certainly not helping my deposit increase.

Its not just pensioners who have savings.

I have savings and a mortgage, but I rate the economy more important than personal gain.
If we don't have jobs we don't save, buy houses or raise tax to pay pensions etc.

DexterA

Really2 wrote: »

I have savings and a mortgage, but I rate the economy more important than personal gain.

Nice sentiment Really. I believe it puts you in the minority.

Really2

DexterA wrote: »

Nice sentiment Really. I believe it puts you in the minority.

Without a working stable economy personal gain goes out the window for all but the very wealthy.
So why anyone would base the IR rate on personal gain is madness.

Much like I have argued here, if you put the rate up for the over 50's with savings (like the article suggests) to give them more cash and ignore all other economic factors (which the article seems to do) it will cause problems (mainly for those with jobs at the moment.)

The right decisions need to be made for the right reasons, not the wrong decision for the right reason (in personal terms).
No part of economic decision that effect all should be based on benefiting a few.

I see Base rate as an economic barometer not a reward chart (especially in a bust).
Lets face it for most base rate has little relation to borrowing and loan levels.
I know the Interest rate on loans of under £5K now is at a all time high.
http://www.thinkmoney.com/loans/news/small-personal-loan-rates-hit-all-time-high-0-4463.htm

des_cartes

Low interest rates along with QE have given rise to the biggest drop in living standards in the UK for 30 years and will continue to do so unless the policy is reversed. Attempting to control the fall in house prices to their normal level (30-40% below peak) has given rise to greater levels of inflation in the UK than in the rest of Europe due to sacrificing the value of the pound via low interest rates and QE. You cannot have an artificially propped up housing market without having the adverse consequences to living standards and the wider economy.

Really2

des_cartes wrote: »

Low interest rates along with QE have given rise to the biggest drop in living standards in the UK for 30 years and will continue to do so unless the policy is reversed.

If that is the case why is the money not filtering into growth & wages?

Thrugelmir

des_cartes wrote: »

Low interest rates along with QE have given rise to the biggest drop in living standards in the UK for 30 years

And the impact if interest rates had of risen but wages still not across the board?

mbga9pgf

des_cartes wrote: »

Low interest rates along with QE have given rise to the biggest drop in living standards in the UK for 30 years and will continue to do so unless the policy is reversed. Attempting to control the fall in house prices to their normal level (30-40% below peak) has given rise to greater levels of inflation in the UK than in the rest of Europe due to sacrificing the value of the pound via low interest rates and QE. You cannot have an artificially propped up housing market without having the adverse consequences to living standards and the wider economy.

Why is the pound back up to 1.62 to the dollar than?
Hardly weak. Went to the UAE the other day, 6 dh to the pound. Cant remember last time that the exchange rate on my credit card was that good out there.

des_cartes

Thrugelmir wrote: »

And the impact if interest rates had of risen but wages still not across the board?

Lower inflation and greater spending power. Just look across the channel and you will see that a strong currency doesn't harm your economy. Germany and France are growing twice as fast as Britain with higher interest rates, a stronger currency and half the UK's inflation rate. Even Greece is growing faster than the UK. Save the pound:mad: and ruin your living standards.

des_cartes

mbga9pgf wrote: »

Why is the pound back up to 1.62 to the dollar than?
Hardly weak. Went to the UAE the other day, 6 dh to the pound. Cant remember last time that the exchange rate on my credit card was that good out there.

But against the currency where the UK does most of it's trade the pound is trading 25% below it's pre crisis interest rates/qe days. Thats why Brits are being shafted with high inflation and an economy that is trying to compete with Bangladesh and Sri Lanka whilst the French and Germans are powering ahead with low inflation and economies based upon quality exports where their exporters are not being hampered by the high raw material prices that are the weight dragging down UK industry.