Interest Rates - BoE should cut them or the governer should go!

foreversummer

lisyloo wrote: »

Yep agree with everything that you say but my question is what does recession, threats facing the economy etc. have to do with the BOE remit? (which is to control inflation).

Because when the Government handed over power to the BOE they also insisted it support its economic policy, including its "objectives for growth and employment". The BOE cannot simply ignore what is going on!

The problem for the Bank’s monetary policy committee is how to balance rising inflation with a significant slowdown in economic growth. One calls for rate hikes and the other for rate cuts.

Fortunately for the Treasury, the Bank of England Act 1998 contains some more small print.
“If, in extreme economic circumstances, the national interest demands it, the government will have the power to give instructions to the Bank on interest rates for a limited period.”
An interesting thought!

Georgous George sums it up in his post.

Foreversummer

MRSTITTLEMOUSE

Dan_Collins wrote: »

Get ready for the ride, jobs will go later this year or early next! This is when it gets messy!

I have to agree,I've thought for ages that circumstances were running true to form towards a recession.Having been a young married woman in the early 70s I remember it well and things do seem to be starting to spiral towards job cuts as they did then.I remember that where I lived there was nearly 50% unemployment and this lasted years not months.The trouble is that's when the rot realy sets in because people have even less money to spend so no need to produce anything so more job cuts.Vicious circle realy.

Dan_Collins_2

MRSTITTLEMOUSE wrote: »

I have to agree,I've thought for ages that circumstances were running true to form towards a recession.Having been a young married woman in the early 70s I remember it well and things do seem to be starting to spiral towards job cuts as they did then.I remember that where I lived there was nearly 50% unemployment and this lasted years not months.The trouble is that's when the rot realy sets in because people have even less money to spend so no need to produce anything so more job cuts.Vicious circle realy.

Yep, I kept it simple. Take away the oil problems and our greed that makes us spend on cards to much and we are just in the same old cycle!

Look back over 10, 20 or 50 years and you will see the same cycle. every 5 years or so things get worse then better and then every 10 years or so it goes pop! That is obvioulsy keeping it very simple and the time period is not spot on but I think you will get my point.

I saw rates of over 6.5% in the early 2000's and about 4-5 years ago we had a slow down in the housing market in Hertfordshire. Now we have the pop!

aardvaak

From reading this thread I would imagine that the likes of some on here have possibly over extended themselves with unaffordable mortgages/loans hence their calling for a rate cut without a thought of the hardship such a move would make to us mortgage/loan free savers and investers wanting to earn a decent income.

lisyloo

Has anyone actually seen any forecasts for rates recently from professional economists?

Does anyone know the results of the shadow MPC?

I'll do a google.

I think there are some good points on here, but it would be interesting to see what the professionals think.

lisyloo

It looks to me like we could be holding for this year.

http://www.economicnews.ca/cepnews/wire/article/96836

http://www.mortgageguideuk.co.uk/blog/interest-rates/interest-rate-predictions/

Treadmill

I think interest rates will remain at 5% for the rest of the year at least then might go up by a couple of quarters in 2009 but won't go above 5.75%...

Until Dave the Chameleon gets in then you're looking at 10%+

jediknightwarrior

I'm taking a more contrarian view. I don't think wage inflation will be a problem in a contacting job market. Although with the public sector you never know!

http://www.inthenews.co.uk/money/autocodes/autocodes/united-states-america/economy-set-escape-recession-$1230837.htm

ixwood

Gorgeous_George wrote: »

I agree.

Rising oil prices will control inflation. The MPC can cut rayes and inflation will still fall as oil prices stabilise at the the new, higher levels.

Higher interest rates will heap more misery on the banks (and therefore everybody and every business). The next move cannot be up.

I don't think now is the time to be do nothing so I expect a rate cut. Possibly 0.5% leaving it still higher than Eurozone.

GG

Expensive oil causes inflation, not cures it.

Our whole society is built on cheap oil. It used making/growing, moving and powering everything. When it goes up, everything else does too as we've seen.

Treadmill

Plastics contain a fair bit of Oil so a rise in the price of Oil will certainly push up or at least stop the price of big tellys etc declining so rapidly, the fall in the cost of computers and tellys has kept the headline inflation figure lower than the reality.