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Low Interest Rates Are Here To Stay

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http://www.guardian.co.uk/business/2009/au...oney?CMP=AFCYAH

Expectations were growing in the City tonight that interest rates could remain at historically low levels for years after the Bank of England gave a strong hint that it might again expand its policy of flooding the economy with money.

Markets were taken by surprise today when minutes of the latest meeting of the Bank's monetary policy committee showed that the governor, Mervyn King, had wanted to pump an extra £75bn into the financial system but was outvoted.

Gerard Lyons, chief economist at Standard Chartered Bank, said it was now possible that King would not raise interest rates from their current all-time low of 0.5% during his current term as governor, which lasts until mid-2013.

I think this is a very real possibility. I wouldn’t take out a fixed rate mortgage anytime soon.

Rates wont go up, as that will send the economy deeper into recession.

I can’t see any HPC either with rates so low. There is no longer any momentum to drive prices lower.

Feb '09 marked the nominal low in house prices.

We saw an almost 70% fall in house prices when priced in gold (real money).

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These minutes further underline the massive uncertainty the economy faces

The unproductive economy is going to need all the help it can get. Doesn't bode well for house prices. Japan knows that very well.

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Something tells me that low interest rates probably won't last, either that or the government will have to increase taxes to compensate for the reduced availablility of wealth transfer from the productive to the non-productive.

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http://www.guardian.co.uk/business/2009/au...oney?CMP=AFCYAH

I think this is a very real possibility. I wouldn’t take out a fixed rate mortgage anytime soon.

Rates wont go up, as that will send the economy deeper into recession.

I can’t see any HPC either with rates so low. There is no longer any momentum to drive prices lower.

Feb '09 marked the nominal low in house prices.

We saw an almost 70% fall in house prices when priced in gold (real money).

What if (when) CPI goes over 2% and rising? Doesn't the BoE have a mandate to control CPI? How can they keep rates at 0.5% if this contributes to rising inflation?

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What if (when) CPI goes over 2% and rising? Doesn't the BoE have a mandate to control CPI? How can they keep rates at 0.5% if this contributes to rising inflation?

Probably has something to do with the compromising pictures of some senior civil servants at the ONS.

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When it becomes clear which countries will actually grow (and which of the rest will not and just carry on their debt junkie self destruction) where do you think the capital will go?

Lend money to debt junkies and the chance of getting it back is, well, pretty darn slim.

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If the UK left interest rates at 0.5% but other countries increased theirs we would suffer from a lack of investment and inflation would rise as we are a net importer. Then interest rates would have to rise. So it isn't just in our hands is it?

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I've been saying interest rates won't rise anytime soon, like not for years. My only precedent to look at is Japan, and 20 years has gone by, and interest rates are actually still falling there not rising.

Plus logic.. the deflationary pressures aren't going away, if anything they are intensifying. And they aren't likely to go away anytime soon.

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http://www.guardian.co.uk/business/2009/au...oney?CMP=AFCYAH

I think this is a very real possibility. I wouldn’t take out a fixed rate mortgage anytime soon.

Rates wont go up, as that will send the economy deeper into recession.

I can’t see any HPC either with rates so low. There is no longer any momentum to drive prices lower.

Feb '09 marked the nominal low in house prices.

We saw an almost 70% fall in house prices when priced in gold (real money).

Are you in the least bit aware of what happened in Japan?

If we enter a sustained period of deflation, debts will become bigger in real terms, accelerating the crash.

Unemployment is growing, banks are lending at 4/5% above base at low LTVs, the suckers' rally is ending with the worst of stocks falls to come and you think there's no 'momentum' to drive prices any lower?

I suspect you've just bought.

<_<

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http://www.guardian.co.uk/business/2009/au...oney?CMP=AFCYAH

I think this is a very real possibility. I wouldn’t take out a fixed rate mortgage anytime soon.

Rates wont go up, as that will send the economy deeper into recession.

I can’t see any HPC either with rates so low. There is no longer any momentum to drive prices lower.

Feb '09 marked the nominal low in house prices.

We saw an almost 70% fall in house prices when priced in gold (real money).

Excellent news for house price stability.

Low rates are here to stay for the foreseeable future.

In Merv we trust.

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http://www.guardian.co.uk/business/2009/au...oney?CMP=AFCYAH

I think this is a very real possibility. I wouldn’t take out a fixed rate mortgage anytime soon.

Rates wont go up, as that will send the economy deeper into recession.

I can’t see any HPC either with rates so low. There is no longer any momentum to drive prices lower.

Feb '09 marked the nominal low in house prices.

We saw an almost 70% fall in house prices when priced in gold (real money).

:lol: Not sure how many threads there have been on the "rates will rise" "rates will fall" debacle but it sure is funny! Nobody really knows nothing, yet so many claim rates will rise. We can all guess what will happen and I wthink thats all that has happened and will continue to happen. Not a pop at op...

So many people on here have claimed rates will rise and it is tedious.....they would like them to rise for their own agenda....but the reallity is ....they will not rise for a long time. If they rise more repos....more debt and more pain....it aint gonna happen. :lol:

Low rates for eternity!! :lol:

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If the UK left interest rates at 0.5% but other countries increased theirs we would suffer from a lack of investment and inflation would rise as we are a net importer. Then interest rates would have to rise. So it isn't just in our hands is it?

Or the resulting weak pound will result in our exports being cheaper, and a reduction in imports due to them being too expensive. The net result might be a trade surplus, which would we rather welcome.

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What if (when) CPI goes over 2% and rising? Doesn't the BoE have a mandate to control CPI? How can they keep rates at 0.5% if this contributes to rising inflation?

You make a good point ;)

Inflation in the UK (CPI) has proved remarkably stubborn and this month's figures were above expectations

US has CPI month on month deflation and we have month on month CPI of 0%

CPI inflation is the one thing that will move interest rates up i would have thought

I can see the strong deflationary forces in terms of demand (lower overtime/bonuses/commision and increased unemployment), but so far the UK has not seen any CPI deflation (unlike a lot of other countries)

I dont see interest rates going up before Christmas (sticking my neck out) but after that I do think they will rise OR we are in Japanese style deflation with the added burden of having to fund our government borrowing abroad

The latter would massacre house prices by pushing up the real cost of debt, surely?

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Or the resulting weak pound will result in our exports being cheaper, and a reduction in imports due to them being too expensive. The net result might be a trade surplus, which would we rather welcome.

But our dependence on imported goods cannot be turned off so easily. So much of what we use (including services/outsourced stuff!) is imported ... even outsourced IT systems and support cannot be easily switched back into UK hands ... and that is not a physical dependence ... so even something that can be moved back into 'local'/non-imported source without building factories (etc) ... no ... the imports we have are largely here to stay ... when their relative price rises we are pretty much stuck with the new price no matter what.

This currency and political risk is - in true middle management blindness - classically IGNORED with outsourcing stuff and suppliers.

I don't have the data to hand about what the current balance between exports and imports is ... but I suggest here that your analysis is rather naive. Does anyone have any data?

Aidanapword

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Is this the same CITY that are:

surprised by the credit crunch occuring at all.

surprised at the extent of bail outs

surprised by the recent GDP figures from France and Germany

surprised by UK QE being exended

surprised at record low tax receipts for a July.

seems to me they cant predict what they want for lunch.

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NS&I have increased their Direct ISA rate from 1.3% to 2.5%, and their Fixed Interest Certs from 0.95% to 1.25%.

Make of that what you will. Personally I think they overdid the drops earlier in the year but both are now still only about half the rate they were this time last year.

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Excellent news for house price stability.

Low rates are here to stay for the foreseeable future.

In Merv we trust.

Very, very poor trolling...

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Guest pioneer31
:lol: Not sure how many threads there have been on the "rates will rise" "rates will fall" debacle but it sure is funny! Nobody really knows nothing, yet so many claim rates will rise. We can all guess what will happen and I wthink thats all that has happened and will continue to happen. Not a pop at op...

So many people on here have claimed rates will rise and it is tedious.....they would like them to rise for their own agenda....but the reallity is ....they will not rise for a long time. If they rise more repos....more debt and more pain....it aint gonna happen. :lol:

Low rates for eternity!! :lol:

You really are a tit

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Yep, I bet there are some recent buyers who have come off their fix this year and are seeing massive overpayments in their mortgages now. And if this goes on then the total cost of ownership for their home is ironically going to be much less that some of you who waited to buy at a lower price but with a higher interest rate! Ho hum! Meanwhile those big deposits are earning very little in the bank whilst inflation eats away...

I'm not pro people buying for the sake of it, I just don't like this idea that buying is necessarily the worst thing anyone could have done in the last 10 years. It isn't clear cut and will depend on personal circumstance and how much value you place on home ownership.

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Low rates could be around for decades, then again they may not.

Who knows, it's anyone's guess.

Hedging your bets again, IRRO?

I suspect that in the very short term, interest rates will stay low. CPI is likely to drop from its unexpectedly high level of 1.8% and may go negative for a while. I reckon we'll see it shoot back into positive territory by March next year.....at which point the BoE may have no choice about what to do with interest rates.

But then again, who knows, it's anyone's guess.....

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Excellent news for house price stability.

Low rates are here to stay for the foreseeable future.

In Merv we trust.

Oh my Gord, pass the bucket. yakkkkk.

Isn't this the same crinkly King that promised savers he knew they were in hardship and would return interest rates to normal levels as soon as he could, not keeping them at this HPI-VI level a moment longer than necessary?

So much for that eh, UK economy=ponzi housing scheme. No ponzi, no country. Pathetic.

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