Fed cuts rate by .5% to 4.75 !!!

ivegotabig1

http://news.bbc.co.uk/1/hi/business/6999821.stm

A number of analysts had predicted a cut of say a quater, but half a percent is suprising, it was rediculously low rates that helped create the sub prime problem in the u.s in the first place, is this just a temporary fix i wonder ??
Alan Greenspan was quoted today as saying inflation will prove to be a big threat in future years in the u.k & ofcourse that is generally combated through higher rates, either way i think it is a good possibility that the BOE will follow suit,at least in the short term, but perhaps by just a quarter point...Might be a good idea to fix your saving into a bond now ??? Any thoughts..?

ashm1

ivegotabig1 wrote: »

http://news.bbc.co.uk/1/hi/business/6999821.stm

A number of analysts had predicted a cut of say a quater, but half a percent is suprising, it was rediculously low rates that helped create the sub prime problem in the u.s in the first place, is this just a temporary fix i wonder ??
Alan Greenspan was quoted today as saying inflation will prove to be a big threat in future years in the u.k & ofcourse that is generally combated through higher rates, either way i think it is a good possibility that the BOE will follow suit,at least in the short term, but perhaps by just a quarter point...Might be a good idea to fix your saving into a bond now ??? Any thoughts..?

Things must be really bad over there.

purch

Alan Greenspan was quoted today as saying inflation will prove to be a big threat in future years

Who was the !!!!!!!!! who dropped the Fed Funds Rate to 1% and kept it there waaaay too long ????? :mad:

Greenspan knows that 'the Inflation Beast' is stirring cos he was the fool who was prodding it with a big stick for years !!!!


Talk about a tarnished legacy :eek:

influence

Will the interest rate in the UK central bank be cut as a consequence? I think it is more impt to me since all my saving are in a saving account.

Surprised to see 7% bond around. Not sure if the super offer will be around for long. The government might just cut rate in their next meeting to save banks like northern rock.

End of my high rate saving.

munk

influence wrote: »

Will the interest rate in the UK central bank be cut as a consequence? I think it is more impt to me since all my saving are in a saving account.

I would imagine the base rate will be cut in the coming months if inflation continues to drop significantly as it did last month. Lower interest rates should theoretically help stimulate the UK markets and consumer confidence generally. Llike you say it'd be in the banks best interests for the BOE to lower interest rates to take some pressure off that have resulted from the US sub prime fiasco and the ensuing credit crunch issues. Spot the amateur economic analysis... :P

I don't think the UK rates will be cut directly as a result of the US cuts - as with all things economic they are very loosely tied though. When America sneezes the rest of the world catches a cold etc etc

purch

I don't think the UK rates will be cut directly as a result of the US cuts

....we'll probably have too unless we want to see Cable trading at 2.20 !!!

RayWolfe

Cable!
Translation: GBP vs USD exchange rate ;-)

free4440273

Nobody really belives the CPI figure of 1.8% anyway. food prices ARE soaring. reminisces of August 2005 when BofE cut by .25 to 'stimulate' the housing boom (as if it really needed stimulating). rates should be held steady until the end of the year IMO but i expect a cut of .25 next month. Everyone happy?

JonnyBravo

free4440273 wrote: »

............but i expect a cut of .25 next month. Everyone happy?

Not a chance of a cut next month......

well obviously a chance.......

but a negligible one........

BoE is far less reactionary than US..... ours should have been rising long before they did and now theyll take time to come round to the idea of dropping them, next month is just too quick.......

so, no, im not happy seeing as I'm a net borrower!!!!

influence

Actually, inflation to me is more important than an interest rate drop. Curbing the inflation will generally provide longer term benefit while interest rate will only boast the market by 'yet another' news.

Most of the business nowadays have high operating cost. I guess it is utmost important to have a more consistent price (e.g. energy, labour cost, even food etc). In that way, we can see more gradual but continual growth for the coming years.

If I am to speculate, I would say there might be at most one .25% drop this year. I think the general economy in UK is still going fairly strong.

Btw, I think Hong Kong cut their rate today as well. HSBC is the first to cut their interest rate followed by Bank of China. But their economy is different from ours.

So.. we shall let time tell the story.

dancinghomer

http://news.bbc.co.uk/1/hi/business/7002628.stm