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

foreversummer

Treadmill wrote: »

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

Hi Treadmill

What is your thinking behind this one? A poster on another thread was of the same opinion, but I can't understand how and why, so just interested.

Foreversummer

Conrad

jediknightwarrior wrote: »

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

I'm inclined to your view. Self employed people are quoting less to win new business, and employed people are forced to accept less as business holds the whip hand when unemployment is rising.

Reducing rates should now eliviate household cost pressure and thus feed into reduced inflation.

Demand for oil may reduce in the short term as everyone cuts back. Longer term, this has been a wake up call to ween ourselves off the black stuff in favour of alternative primary power sources.

Petrol based vehicles will start to decline in the West. The naysayers will not be able to get thier heads around alternatives, they never can (they told us TV would never become mass market), but I'm sure the combustion engine has been served a fatal blow.
Even in Texas they're pouring billions into wind farms.

Treadmill

foreversummer wrote: »

Hi Treadmill

What is your thinking behind this one? A poster on another thread was of the same opinion, but I can't understand how and why, so just interested.

Foreversummer

Dave is a Thatcherite, High interest rates take money out of the economy and reduce inflation, as does high unemployment which will occur too as a result of high interest rates.

High interest rates don't just mean the public feel the pinch and spend less thereby reducing the amount of money sloshing about in the economy, it also means industry will be inclined to save money and reap the interest rather than investing and putting money into the economy, Daves big industry pals get richer without even having to take risks or speculate... nice.

Torys hate inflation because it eats into their big fat piles of cash.

This is my over simplistic bloke down the pub politically biased slant on it, look up monetarism on Wiki...

The Torys will win by a landslide in 2010 so now is a good time to start looking for a long term fix on your mortgage IMHO.

[Deleted User]

My feeling on the interest rate front is that the economic slowdown is about to hit far faster and harder than anyone was expecting and interest rates will start to fall around October time. I certainly don't believe as some do that we will see any interest rate increases in the near term. Retailers (particularly car retailers) will see their sales fall off a cliff. My own personal instinct currently is to stuff as much into savings as possible to make sure that I've got enough to cover 1) the expected imminent increases in gas and electricity.
2) further increases in food prices. 3) the cost of buying a newish car (size and type likely to be affected by how high fuel prices go).- purchase to be delayed as long as possible. 4) a financial cushion in case I lose my job in the expected downturn.

lisyloo

{QUOTE]the expected imminent increases in gas and electricity[/QUOTE]

You could always consider fixing.

SuperV

Reason behind booms and busts is the wrong way BoE basic interest rate is calculated - they should use BCCI - British Caused Core Inflation.

In 70's there was an oil shock that caused inflation. Higher BoE interest rate killed economy.

Since the middle of 90's cheap imports hid the real inflation, hence so called boom (in house prices and everything else).

In order to avoid booms and busts it is a necessity to use BCCI to calculate BoE basic interest rate.

If the rate is not cut tomorrow... well, some people already mentioned what it looked like in 70's.

neas

Couldnt be assed reading the thread..

Seems more vested interest poopie. Prices are rising sky high, people are borrowing more and more rather than saving like our parents gen. did. We as a nation are 'going for broke' People need to be encouraged to save.

Interest rates are only tool they have to curb inflation... that and finding alternative energy sources like nuclear.... last 12 years labour haven't developed nuclear at all... it has a long lead time and NOW they want to look into it.. .we will have a good 6-8 years until any new nuclear scheme provides more power... so we are shafted cause of a governments inability to look forward oO

SuperV

With so many bad news in the UK and in the US (on a brink of financial collapse) the time has come to "divorce" from the US economy and take a good look at what the UK has.

Interest rate is too high, inflation uncontrollable, economy in free fall...

Solution - cut the interest rate to between 4 and 4.5% (to control BCCI), cut VAT and tax on petrol (will affect inflation), allow banks to use their funds instead of forcing them to increase interest rates they charge for capital (will affect retail and business loans). Government will have to cut amount of tax it collects as well.

dunstonh

Interest rate is too high

Its below the long term average.

inflation uncontrollable

Its not often in the past the UK would have considered 3.8% inflation uncontrollable.

economy in free fall...

The economy is slowing down and could fall into deficit but at present it still is growing,

lisyloo

The economy is slowing down and could fall into deficit but at present it still is growing,

I think the current growth statistics are a "lagging" indicator and the trend is pretty clear.
The massive increases that people are seeing in mortgages, fuel and food are certain to have a serious effect.
The real icnreases people are seeing are closer to 40% in some cases and not 3.8 (CPI does not include housing costs).
My mortgage interest is rising 30% too and I'm one of the lucky ones able to get a good deal.
Someone going from 5% to 7.49% (with northern rock for example) will see a huge increase and we are going to see big rises in repossessions.
Northern Rock are not going easy on people who don't pay . I'm not saying they should, but there will be no breathing space.