'U.S. rates due to be raised this year'

veryintrigued

Hope for us savers that the BoE will follow and then the UK institutions will follow too?

Have I been drinking too much?

http://www.bbc.co.uk/news/business-33488250

colsten

There are two sides to the same coin. Higher interest rates are good news for savers but bad, and perhaps terrible, news for people with mortgages, and perhaps for the entire economy.

As a saver myself, I am presently still coming down on the side of keeping interest rates at the same low levels because our (the UK) economy is only just coming out of intensive care but isn't yet strong enough to sustain the onslaughts of the effects of the turmoil in the Eurozone, in China, in the Ukraine, in Puerto Rico, and the impacts of the global migration challenges.

Same applies to the US.

I'd rather see a bit more stability in the world than a doubling of the interest rates.

abdul56

I wonder what effect this will have on UK bonds and global equity markets?

Will this result in a down turn more so than greece?

veryintrigued

Nearer but how near?

http://www.bbc.co.uk/news/business-33522747

Tammer

With inflation running at 0%, the chances of interest rates rising soon must be pretty slim.

justme111

Office for national statistics, inflation over 10 year is about 35%. So you need to pay fir everything about a third more , ie our salaries give us a third less than 10 years ago....

ChopperST

I really don't get the "hope for us savers" bit.

Inflation is 0% and there a multitude of accounts that pay 2%, 3%, 4%, 5% and even regular savers at 6%

Even as a higher rate tax payer your can easily beat inflation with cash savings if you want to take zero risk.

What level of interest are you earning on your savings veryintrigued?

AndyT678

justme111 wrote: »

Office for national statistics, inflation over 10 year is about 35%. So you need to pay fir everything about a third more , ie our salaries give us a third less than 10 years ago....

And how many people have exactly the same salary that they did 10 years ago? I'm not sure what your point is.

justme111

My point is a rant about "0" inflation. I checked the number of ONS site. - 10 years inflation 38%. Re wages - minimal wage was £5.05 in 2005 while now it is 6.15. To buy what costed £5 back then would cost more than £7 now. If someone has higher income now due to career progression it has nothing to do with inflation . News about 0 inflation are political spin , it may be 0 if houses not taken into account (relevant for population of boat dwellers ) and if one looks at a particular isolated month which is not relevant in the context of savings.

veryintrigued

ChopperST wrote: »

What level of interest are you earning on your savings veryintrigued?

An average of circa 3% gross utilising God knows how many CAs, RS and playing the mercenary moving bank game.


Does wanting more make me bad? And do you know my personal financial circumstances?


Have I stumbled into a 'moneywastingexpert.com' site?

bowlhead99

justme111 wrote: »

My point is a rant about "0" inflation. I checked the number of ONS site. - 10 years inflation 38%. Re wages - minimal wage was £5.05 in 2005 while now it is 6.15. To buy what costed £5 back then would cost more than £7 now. If someone has higher income now due to career progression it has nothing to do with inflation . News about 0 inflation are political spin , it may be 0 if houses not taken into account (relevant for population of boat dwellers ) and if one looks at a particular isolated month which is not relevant in the context of savings.

You're comparing apples with oranges though.

On the one hand you say we should not be looking at just the most recent one-year inflation rate (when price increases in some areas were offset by small falls in food prices and large falls in petrol prices giving 0% CPI and 1% RPI) because really it is just a snapshot. The 10 year figures are more useful and relevant to you and you think short term snapshot numbers are no good.

The increase in RPI of 34.7% in 10 years equates to 3% compounded annually. The increase in CPI over the same period equates to 2.5% compounded annually. Your personal measure would depend on what you bought and how that changed over the period, perhaps it's 1% p.a., perhaps 5%, though it's very difficult to say for most of us because we don't have a static income or static desire for the same goods and services year in year out. But anyway, pick a number and say that's what you needed to achieve to keep pace with inflation.

But on the other hand you are looking at the savings rates available today, where people on various threads are moaning that their rates just dropped to 1% or thereabouts, once they've exhausted all the high interest accounts and still want to save more on top. You don't think these rates are very good.

However, the rate available on the high street today is a brief snapshot of what the market will give you now at a point in time. If brief snapshots are unimportant and don't convey the full story, you should ignore them, right?

If you don't think snapshots are useful, then what you should be comparing your historic, backwards looking 2.5 average CPI or 3% average RPI with, is not today's saving rate, but what saving rate you achieved over the last 10 years. Then you can see if you got a raw deal from the banks or not.

I would suggest that someone who shopped around for reasonably competitive rates each year for the last decade would have far exceeded those average CPI/RPI rates on their savings and their £5 from 2005 would easily be able to buy the theoretical £7 item today, without taking any investment risk along the way.

veryintrigued wrote: »

Does wanting more make me bad?

Not at all, it's good to have ambition. However, if you're already achieving a return which is a decent multiple of the central bank base rate, and consumer prices were rising at only 0%-1% during the last year, you can't expect many banks to be keen to pay you a lot more than that fully guaranteed and insured.

Carney said yesterday that while rates will go up at some point, he doesn't see them getting up to the really high rates we saw in recent decades. Ideally we don't want an economy where the banks have to pay you 5-10% a year for zero risk to help you afford prices spiralling up at 5-10% a year.