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Turnbull2000

Pressure For Rate Cut To 0%

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http://www.guardian.co.uk/business/2009/se...tes-cut-bcc-gdp

Bank of England policymakers should cut interest rates to zero this week to prevent tentative signs of economic recovery giving way to a "relapse", the British Chambers of Commerce warns today.

In its quarterly forecast, the BCC predicts that GDP will contract by 4.3% in 2009 - faster than it expected three months ago - before recovering in 2010, to chalk up modest growth of 1.1%.

But David Kern, the BCC's chief economist, warned that a shortage of bank lending was still starving businesses of cash, and urged the Bank's monetary policy committee to cut rates from the current record low of 0.5% to zero.

Edited by Turnbull2000

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ZIRP is a crucial watershed because it means that people really are actually better off putting money into safety despot boxes.

As long as holding cash deposits bolsters a bank's ability to lend under Basel II, keeping interest rates above zero is a good idea. If they are cut (as everyone to do with property is baying for), it could backfire spectacularly on the banking industry and tip net lending deep into negative territory.

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Do the BCC have a clue. about anything. at all. seriously ?

0.5%, 0% -0.25%. Makes f*** difference to the banking sectors ability and willingness[the important bit] to lend.

Yes there are token reserve requirements imposed by some regulation, but banks aren't really constrained in their ability to lend. Neither does QE improve on their ability and willingness to lend [sshh, whisper that one quietly less we knock any of the fairy dust off of the magic QE bullet for the likes of Ambrose Retched Winalot or whatever he's called ove at the torygraph ]......after all making loans creates deposits for banks.

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Do the BCC have a clue. about anything. at all. seriously ?

0.5%, 0% -0.25%. Makes f*** difference to the banking sectors ability and willingness[the important bit] to lend.

Yes there are token reserve requirements imposed by some regulation, but banks aren't really constrained in their ability to lend. Neither does QE improve on their ability and willingness to lend [sshh, whisper that one quietly less we knock any of the fairy dust off of the magic QE bullet for the likes of Ambrose Retched Winalot or whatever he's called ove at the torygraph ]......after all making loans creates deposits for banks.

yep, business loans are base +6 and higher...much higher.

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yep, business loans are base +6 and higher...much higher.

Plus any business that hangs on the balance of rates being a few % apart isn't much good either.

Just whingeing.

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Its little different than those High St shops who have the massive 75% off

posters covering their windows and on entry the reality that only 2-3 % of available items

are actually that price hits you

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Have they thought that 0.5% or 0% might be causing some of the problems? It's a constant reminder to me how fu

cked we are.

'The only thing we have to fear, is fear itself' Well the 0.5% base rate is making me fearful. Stop it!

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I feel that IRs should be based on house prices (not mortgage payments), wages and RPI in equal measure.

IRs mostly affect mortgages / house prices, but the BoE are only targeted on 'inflation' and perversely an increase in IRs = increase in mortgage payments = increased inflation (on the current measure).

Current increases in house prices suggest to me that IRs are at least 3% lower than they should be (but I don't have an election to win!).

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I feel that IRs should be based on house prices (not mortgage payments), wages and RPI in equal measure.

IRs mostly affect mortgages / house prices, but the BoE are only targeted on 'inflation' and perversely an increase in IRs = increase in mortgage payments = increased inflation (on the current measure).

Current increases in house prices suggest to me that IRs are at least 3% lower than they should be (but I don't have an election to win!).

Hello! Hello! Interest rates affect ALL loans...thats government borrowing, interbank, credit cards, car loans, business loans, indeed, as all money is lent into existence, the very value of money itself.

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Paying next to nothing on your mortgage is very satisfying :lol:

Instead of being constantly screwed by extortionate fees and charges, you feel like you are getting one over the banks for a change.

But people on long terms fixes at near 5% must be feeling gutted at the moment :(

Edited by Mammon

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Hello! Hello! Interest rates affect ALL loans...thats government borrowing, interbank, credit cards, car loans, business loans, indeed, as all money is lent into existence, the very value of money itself.

Not so. As far as I can see the .5% IR has not fed to credit cards, store cards, car loan or business loans.

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Not so. As far as I can see the .5% IR has not fed to credit cards, store cards, car loan or business loans.

Its all linked.

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