UK interest rates held at 0.5% for years

meunier

I wonder, Flapjack, did your financial advisor think that interest rates would EVER go up? Carney seemed to imply --- (in fact he said it in an interview) --- that they would. He said that was the mark of a 'healthy economy' which is why they were tagging the employment rate.

chucknorris

latecomer wrote: »

Unfortunately life isn't fair. I have little sympathy for people who are on the brink financially but still have expensive mobile contracts, Sky etc.

But of course the government is happy for people to spend every last penny they have as thats whats keeping the economy from imploding. Those who save are of no interest.

But it has its upsides too - I've also thought about investing into a S&S ISA rather than cash but always been too cautious to do anything about it but the abysmal interest rates is finally a big enough incentive to make me do it - which is a good thing

I've not invested enough in shares for ages and as my fixed rate savings bonds mature with only pathetic savings rates available, I too have recently started investing more into shares. Although I have always (last 10 years anyway) invested in S&S ISA's.

I'm also making an effort to pay more into my pension.

Glen_Clark

meunier wrote: »

I wonder, Flapjack, did your financial advisor think that interest rates would EVER go up? Carney seemed to imply --- (in fact he said it in an interview) --- that they would. He said that was the mark of a 'healthy economy' which is why they were tagging the employment rate.

Remarkable that even the suggestion that interest rates could rise at some point in the future triggered an immediate fall in share prices. A stark reminder that asset prices are pumped up only by astronomical money printing and the lowest real interest rates for over 300 years, whilst the real economy is going from bad to worse.
Shares are still looking a lot better than cash at the moment, but everybody wants to dump them before interest rates rise.

vacheron

Well I've admitted defeat having just logged in to my online banking to find that my variable rate ISA has dropped from an already miserable 2.6% to 1.3% in the last week so I'm going to call an architect today and spend a big chunk of my savings on a kitchen extension I've been sitting on the fence about for some time now.

No point in sitting around watching inflation erode my best efforts at 1-2% per year when we could be enjoying something tangible.

FLAPJACK

meunier wrote: »

I wonder, Flapjack, did your financial advisor think that interest rates would EVER go up? Carney seemed to imply --- (in fact he said it in an interview) --- that they would. He said that was the mark of a 'healthy economy' which is why they were tagging the employment rate.

That was my question exactly.....answer was that the B of E has stated that there will be no increase until unemployment hits 7%....i.e 750,000 jobs need to be created.

The other way rates would increase before then is if inflation takes off.

So what comes first 750,000 jobs or rising inflation.....I think we as savers need to get our collective heads around the fact that low interest rates are to be a pretty constant feature of the UK financial landscape.

I suppose it makes light work of searching the "best buy" tables for savings accounts!:)

sabretoothtigger

mouldy cheese in a cupboard is currently yielding greater returns then a savings account to be fair

John1993_2

Glen_Clark wrote: »

Remarkable that even the suggestion that interest rates could rise at some point in the future triggered an immediate fall in share prices. A stark reminder that asset prices are pumped up only by astronomical money printing and the lowest real interest rates for over 300 years,.

No, that doesn't follow. The stock price gives the net prsent value of the future dividend flow, and any rise in future rates from previous expectations drops this discounted present value. This would be the case whatever your starting point, and whether or not prices were "pumped".

If rates were at 20%, it would still happen when expectations increase.

ColdIron

Very low interest rates are not too damaging if inflation is also low but one of the less obvious consequences of Carney's policy is what seems to be an abandonment of the BoE's brief to target 2% inflation

http://www.saveoursavers.co.uk/inflation/has-carney-played-his-knockout-joker-already/

xylophone

spend a big chunk of my savings on a kitchen extension I've been sitting on the fence about for some time now.

Just what a low interest rate policy is designed to encourage?

You'll be employing an architect, a builder and throwing the cash about in the kitchen dept at John Lewis....

All that lovely NI and income tax and VAT flowing into Georgie's coffers......;)

Thrugelmir

Glen_Clark wrote: »

Remarkable that even the suggestion that interest rates could rise at some point in the future triggered an immediate fall in share prices.

Market believes that conditions will be right for rate rise earlier than BOE is forecasting. Next month Carney will revise his statement accordingly. So "his" guarantee only lasts 31 days at the most. Before the game may change again.