Thursday, Jan 07, 2010
Base rate held at 0.5%
BBC: Freeze on UK interest rates continues
UK interest rates have been kept unchanged at 0.5% following the Bank of England's latest meeting. The cost of borrowing has been at a record low since March 2009 and economists do not expect the central bank to raise rates in the near term. The Bank's Monetary Policy Committee also maintained the quantitative easing (QE), or asset buying, programme at £200bn. The UK is expected to have exited recession in the last quarter of 2009. Manufacturers said they supported the Bank's decision.
Posted by jack c @ 12:12 PM (1813 views) Add Comment
13 Comments
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2. mark wadsworth said...
Well of course manufacturers like it, but for every £1 that manufacturers save in slightly lower interest, the Home-Owner-Ists save about £10. Far better to hike interest rates and reduce VAT and Employer's National Insurance.
The former is a transfer from manufacturing to Home-Owner-Ists; the latter is a transfer from Home-Owner-Ists to manufacturers.
3. hpwatcher said...
So the tax on savers will continue, in that they are paying to keep interest rates low and house prices high?
Having no incentive to save is going to destroy this country.
4. mrflibble said...
Don't worry, by this time next the base rate will be 20% the way we are going. Since the only way out of this mess is for a majority Tory government who successfully implement a realistic emergency budget the markets are happy with then I'm not holding my breath. Stick with Brown or hang the parliament and you'll get your hpc, but it may not be all you hoped for given what else is likely to come with it.
5. Sukma Lefbul said...
Interest rates will never get about 3% again. All central banks have engaged in an ever decreasing rate cycle that lowers the pain threshold on every cycle. I love my .54% above BOE tracker mortgage, you will never see these deals again.
http://www.guardian.co.uk/business/2009/jun/04/interest-rates-held-record-lows#zoomed-picture
6. hpwatcher said...
but it may not be all you hoped for given what else is likely to come with it.
Why? - potato picking has always appealed to me!
7. paul said...
What a mess. The BBC carefully couches a select group of export-oriented manufacturers in order to gain voices of approval for this bung to homeowners. This despite inflation very nearly above target at 1.9%. The Bank is playing fast and loose with monetary policy in order to maintain high house prices. Shame on them, and on the BBC for carefully constructing an artifice of approval.
8. hpwatcher said...
The Bank is playing fast and loose with monetary policy in order to maintain high house prices. Shame on them, and on the BBC for carefully constructing an artifice of approval.
If house prices collapse, so the banks will too, that's why the obsession.
9. mrflibble said...
Why? - potato picking has always appealed to me!
Me too, I'm sick of shinning a chair with my @rse when I could be out in the open air :-D
I can see people heading over to the continent for work before much longer and sending the money back to the UK. Our fate could well have an evil touch of irony about it. With the Euro 23% higher than it was at the start of this recession a job over there now instantly offers a 23% pay raise. Not long before mopping the floors in France will pay the same money as a career in the UK.
Thanks Gordon, I'll send you a nice box of spiders in appreciation...
10. matt_the_hat said...
On the continent I know of nursery teachers who are on 50k+ euros with 17+ weeks holiday a year
11. nickb said...
Instead of the smoke and mirrors QE program, why don't the BofE buy company bonds to ease the credit situation in the real, productive economy? Apparently the ECB has been doing this as reported on Willem Buiter's FT blog (before he sold out and shut up).
12. alan_540 said...
The Nationwide has just upped their 5yr fixed rate by 2% to 7.4%...
13. stillthinking said...
The BoE seemed to have been fairly successive with setting inflationary expectations. Wages are frozen, unemployment is rising, demand is falling, and people are repaying debts. 2010 might be deflationary. Wait a bit.