Interest Rates

[dog]

A US analyst on radio 5 this morning confidently predicted that US interest rates would be above 5% by this time next year.

UK interest rates will have to rise no matter what Gordon wants.

[sign_of_the_times]

A US analyst on radio 5 this morning confidently predicted that US interest rates would be above 5% by this time next year.

UK interest rates will have to rise no matter what Gordon wants.

<{POST_SNAPBACK}>

what are the chances of him dragging us into the euro (kicking & screaming) with their 2% rates ?? or has this been debunked already ?

[look to the past]

UK interest rates will have to rise no matter what Gordon wants.

<{POST_SNAPBACK}>

Why care what the US rates are?

I don’t quite see what is stopping reducing the IR’s to 2% anyway.

I am sure they will sweep inflation under the carpet (even more so than now)

Change a few rules here and there a necessary

It’s more important to them to keep the economy going

I really don’t think that they will be worried about devaluing the pound if that is why you think they will have to keep up with the US

[BoredTrainBuilder]

Why care what the US rates are?

I don’t quite see what is stopping reducing the IR’s to 2% anyway.

I am sure they will sweep inflation under the carpet (even more so than now)

Change a few rules here and there a necessary

It’s more important to them to keep the economy going

I really don’t think that they will be worried about devaluing the pound if that is why you think they will have to keep up with the US

<{POST_SNAPBACK}>

Look to the past, you're quite right it's classic HPC wishful thinking. If Euro rates are 2% and our economy is more flexible (and therefore less prone to inflationary pressures) and we also have a partial cushion from high oil prices unlike many other developed countries why do UK interest rates need to be higher than elsewhere?

They will continue to drop until such time as the credit cards come out again I'm quite sure.

[mustrum_ridcully]

what are the chances of him dragging us into the euro (kicking & screaming) with their 2% rates ??  or has this been debunked already ?

<{POST_SNAPBACK}>

GB isn't too keen on the Euro as far as I can see - that's why he's always ducks the issue of the 5 (or however many) tests for joining the Euro.

A recession/house price crash reduces the chances of Labour winning another term, Euro entry would remove any possibility of Labour winnning.

[AteMoose]

Seems appropriate, its a couple of mounths old now, you will notice that uk rates are rarely below us, and if they are it is only very temporary. UK rates are usually a couple of percent above us rates... If the us raise theres to 5, the uk rates will have to go higher.

Whenever the uk rates have been significantly above us rates in the past, the us rate has short up, and the uk rate has followed (79, and 89, and 93 to a lesser extent)

Edited September 20, 2005 by moosetea

[FernandoMorientes]

Why care what the US rates are?

I don’t quite see what is stopping reducing the IR’s to 2% anyway.

I am sure they will sweep inflation under the carpet (even more so than now)

Change a few rules here and there a necessary

It’s more important to them to keep the economy going

I really don’t think that they will be worried about devaluing the pound if that is why you think they will have to keep up with the US

<{POST_SNAPBACK}>

Yep well Gordons changed enough rules already so why not a few more?

Once the sh*t hits the fan he will be out of office anyway & the minions will have to pick up the pieces so who cares?

[look to the past]

<{POST_SNAPBACK}>

Nice chart – I have seen it before and I would have though nothing has changed – but I still think we are more likely to follow Europe now – it just makes sense

If only we had a chart showing interest rates of Europe / UK going back 25 years

[DonnieDarker]

Would low interest rates really be so terrible for us?

I'm a saver but if interest rates were to drop to 2% I would simply dump my entire savings into buying a home and then overpay like crazy whilst the rates were so low.

Would probably clear the mortgage in about 7 years.

PS.

That chart suggests that if the US rate did ris to 5% then ours would rise to 6.5%ish which if I am not mistaken is the historical average anyway.

Edited September 20, 2005 by DonnieDarker

[Guest Charlie The Tramp]

That chart suggests that if the US rate did ris to 5% then ours would rise to 6.5%ish which if I am not mistaken is the historical average anyway.

<{POST_SNAPBACK}>

More in the range of 9.75% the past forty years.

baserate.pdf

baserate.pdf

[DonnieDarker]

OUCH!

[MarkG]

Would low interest rates really be so terrible for us?

Um, yes. They've devastated the British economy in the last five years and lowering them again would only make matters worse.

If rates were cut to 2% for a few years, Britain would be a total basket-case and the pound wouldn't be worth wiping your ass with.

[karhu]

Um, yes. They've devastated the British economy in the last five years and lowering them again would only make matters worse.

If rates were cut to 2% for a few years, Britain would be a total basket-case and the pound wouldn't be worth wiping your ass with.

<{POST_SNAPBACK}>

[look to the past]

If rates were cut to 2% for a few years, Britain would be a total basket-case and the pound wouldn't be worth wiping your ass with.

<{POST_SNAPBACK}>

Best not to use the pound

A fist of (inflation adjusted) fivers is much better / easier

[simon99]

I see Tesco is still booming. Where is this consumer slowdown? It is clear the money has just shifted to Tesco from the high street. I read in the Express that Gordon could temporarily shift the inflation target if inflation takes off, this would be another disgraceful kick in the teeth for savers, in my opinion.

Edited September 20, 2005 by simon99

[Nijo]

I don't have the full article, but:

http://news.ft.com/cms/s/db367b32-29a4-11d...000e2511c8.html

Sir Terry Leahy, chief executive, said: “Although we had budgeted for a large increase in oil-related costs, current oil prices suggest actual costs may be as much as £60m ($108m) above budget for the full year, a level which will be hard to absorb fully through other costs savings.”

Maybe the current boom in the supermarkets is related to people buying tins of beans in case of economic meltdown. Is there correlation between gold and beans?

[Guest Charlie The Tramp]

Maybe the current boom in the supermarkets is related to people buying tins of beans in case of economic meltdown. Is there correlation between gold and beans? 

<{POST_SNAPBACK}>

Well you can eat beans but not gold.

[MarkG]

You can eat gold, it's just not very nutritious.

And, frankly, it would take a pretty serious survival situation for you to be unable to find a person willing to trade you a can of beans for a Krugerrand.

[E Powell]

look to the past

I would pick up an economics books and look for the

term interest rate parity.

Do we really want money flowing to the USA to fund their

investment ?

[Guest rigsby II]

You can eat gold, it's just not very nutritious.

And, frankly, it would take a pretty serious survival situation for you to be unable to find a person willing to trade you a can of beans for a Krugerrand.

<{POST_SNAPBACK}>

Having watched another the-sky-is-falling-in Trevor McDonut prog last night about bird flu my first thought was I must get a gun.

Everyones going to be either incapacitated or dead with bird flu.

No coppers on the street, no food and a break down in law & order & society.

So its OK having gold and beans, what you really need is a big f**k off gun and lots of bullets.

[BuyingBear]

Why care what the US rates are?

I don’t quite see what is stopping reducing the IR’s to 2% anyway.

<{POST_SNAPBACK}>

Apart from the currency collapsing and rising trade deficits and inflation there's little reason to care.

[BuyingBear]

I see Tesco is still booming. Where is this consumer slowdown? It is clear the money has just shifted to Tesco from the high street.  I read in the Express that Gordon could temporarily shift the inflation target if inflation takes off, this would be another disgraceful kick in the teeth for savers, in my opinion.

<{POST_SNAPBACK}>

Tesco has done well but one company doesn't make a market, not even one as big as Tesco. Tesco also said to expect 3-4% headline growth in the future.

U.K. retail sales stagnated in August after dropping more than previously estimated in July as consumers spent less in food stores.

[Leodhasach]

Tesco has done well but one company doesn't make a market, not even one as big as Tesco. Tesco also said to expect 3-4% headline growth in the future.

<{POST_SNAPBACK}>

Doesn't Tesco doing well suggest than people are buying their clothes from Tesco instead of the high street? ditto for hardware etc. - i.e. going for value over style, because belts are being tightened?

Does anyone have breakdowns of Tesco's growth - was it in food or non-food?

...or maybe discount loans?

[OzzMosiz]

If we head for 2% interest rates, then wouldn't savers shove their money into

the US for higher rates?

[look to the past]

Apart from the currency collapsing and rising trade deficits and inflation there's little reason to care.

<{POST_SNAPBACK}>

I might be talking cross purposes here but

Wouldn’t the currency collapsing actually help trade deficits by making it cheaper to export goods that we make – therefore selling more

We will all have to look for the last person in England with a machine a little knowledge and ask to work for him, as he will be the next billionaire (if indeed a man / woman like this actually still exists)