Serious now what would force interest%up?

gailey_2

As a relative nipper
and not expert on economics.

I wondered what instances would happen which would force the bank of england to up the base rate?

I know they have kept it low for ages.Think current plan to keep it low for next 3-5years.

But would events force their hand and make them increase?

reccesion?

Eurozone crisis?

GlynD

They won't put interest rates up in a recession. They'll use it as a tool to cut public spending when inflation is going out of control in better times.

Generali

gailey wrote: »

As a relative nipper
and not expert on economics.

I wondered what instances would happen which would force the bank of england to up the base rate?

I know they have kept it low for ages.Think current plan to keep it low for next 3-5years.

But would events force their hand and make them increase?

reccesion?

Eurozone crisis?

2 things IMO:

CPI inflation being at 5-6% still in a year
The Pound falling quickly and by a large amount in value

Recession is more likely to see rates kept low.
Eurozone crisis ditto although nobody really has a clue what would happen in that case except safe to say it would be a mess.

MrRee_2

Rates will be low for a long, long, long, time ......

Political forces will come into play in 2013/14 ... when the Government will be looking to re-election in 2015.

I see rates remaining where they are until 2016.

That will mean that we will have had a fair number of clever buyers who bought their homes in 2009 on UltraLow Mortgage rates who may well have cleared their debt 7 years later in 2016 when rates may increase.

They will be seen as the cleverest of all people by the time 2017 comes around.

Wookster

Generali wrote: »

Eurozone crisis ditto although nobody really has a clue what would happen in that case except safe to say it would be a mess.

Alphaville had a good take on that here: http://ftalphaville.ft.com/blog/2011/12/07/784451/ubs-doubts-your-eurozone-contingency-plan-is-good-enough/

Hard to see that a euro collapse would cause rampant inflation in the UK though.

lisyloo

who may well have cleared their debt 7 years later

I'm all for it, but you have to be going some to clear it in that time, even with very low interest rates.

Mallotum_X

lisyloo wrote: »

I'm all for it, but you have to be going some to clear it in that time, even with very low interest rates.

Or have bought a cardboard box bedsit such as MrRee's home.

RenovationMan

Rates will go up once the BoE sees a sustained recovery in the UK Economy and they will increase tentatively in line with the level of that recovery. We will have 0.5% for at least another year with a series of cautious 0.5% gradiant increases from then on. IMHO.

Mallotum_X

Rates will change, once there is a reason to make them move.

It could be due to a good recovery, or possibly to influence currency exchange.

Whilst there is no currently obvious reason for a sudden jump if events overtook us there is no reason at all why rates couldnt jump up quickly in a short period of time.

DervProf

RenovationMan wrote: »

Rates will go up once the BoE sees a sustained recovery in the UK Economy and they will increase tentatively in line with the level of that recovery. We will have 0.5% for at least another year with a series of cautious 0.5% gradiant increases from then on. IMHO.

I take it that your wireless keyboard's batteries failed before you could finish typing that post.

:xmassign: BTW.

Cleaver

MrRee wrote: »

That will mean that we will have had a fair number of clever buyers who bought their homes in 2009 on UltraLow Mortgage rates who may well have cleared their debt 7 years later in 2016 when rates may increase.

They will be seen as the cleverest of all people by the time 2017 comes around.

Having bought a house in 2009 I'm looking forward to being crowned one of the 'cleverest of all people' in 2017. This should make up for spending waaaaaayyyy too much on my first house in 2004 and selling it at a 11% loss in 2008. In that year I was given the 'foolish and over-excited first time buyer' award.