Negative interest rates

Sailtheworld

It's complicated because I'm also hearing about the great inflation that's coming. Is it the great deflation first or after?

potatobrains

A current Financial times headline "BoE says negative interest rates are ‘under review’ for first time" is a bit worrying. I've checked my ISA T&Cs and they have to give 60days notice before decreasing rates, so there'll be time to figure out what to do if it does happen, hopefully most accounts have some such delay.

EdGasketTheSecond

Sailtheworld said:

It's complicated because I'm also hearing about the great inflation that's coming. Is it the great deflation first or after?

Deflation first, then inflation

Gary1984

Premium bonds will be interesting when negative rates come. Will Ernie be deciding which bonds get executed instead of winning prizes? 

Harvic

Ultimately a lot of people are losing money on cash savings and have been for many years. My parents have still got the bank account they first opened years ago and are 'loyal' to the bank.
Fundamentally there is no real difference between inflation 2%/interest 1% (net -1%) and inflation 0.8%/interest -0.2% (net -1%) but of course, people will take it a lot harder when the actualise that loss on their bank balance for the first time. Would be a PR disaster for banks of course...

happybagger

It would no doubt cause some to invest in other things like shares, and cause some to withdraw and keep it "under the bed" etc.
The psychological point of being given the common warning of "you may get back less than you invested"  when opening a savings account would be interesting, and I reckon the run on Northern Rock would pale into insignificance.

Retail savings are unlikely to go negative. The margin would be made up from mortgages and loans.