Thursday, Nov 22, 2007
Rate cut all but decided
Times: Rate-setters split over cost of borrowing
Jonathan Loynes, of Capital Economics, said: “Gieve’s vote may have been partly motivated by his extra interest in the financial markets in his role as Deputy Governor for financial stability and the criticism he received in the wake of the Northern Rock debacle.”
Posted by confused76 @ 08:12 PM (468 views) Add Comment
5 Comments
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1. crash bandicoot said...
Why do financial markets have a bearing on BOE base rates? I thought that they were only supposed to keep inflation at 2%. If they were worried about the markets, perhaps it would have been prudent to increase rates a little a couple of years ago. Maybe that would have limited the trouble that we are now in.
2. confused76 said...
you are right. has no bearing, but with Sir John's and all his cronies' VIs in banking, they need low rates to bail out the industry.
what I am ABSOLUTELY DELIGHTED about is that rate cuts are precisely to bail out the industry and not to lower the mortgage rates (think about base rates go down but spreads go up!! what a dream for the bankers)
3. Borisina said...
Dear Confused
Please explain in easy steps why you would be absolutely delighted about rate cuts. On another thread in the main forum someone suggested that the Libor rate was only ever one percent above the BOE base rate. I think that the BOE are charged with managing inflation as well as trying to maintain financial stability amongst banks so it does look like a cut (bah) but I do not understand about spreads going up, and what effect this may have on mortgage rates. Thank you in advance
4. waitingfor hpc said...
i have over £750,000 in cash Personnel & Company money, if rates drop I am going to pull the whole lot out the UK.
5. dbnazz1 said...
The conundrum....
If we drop rates, that may in one respect appear to save the economy from one point of view, however it will only fuel inflation (which is running away under its own steam anyway) and kill the economy from a different angle. The policy makers have boxed themselves into a corner. Heads we lose, tails we lose.
There is absolutely no escape from a severe downturn whatever action is taken. Inflating our way out of the problem won't work either.