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Bank of England considering negative interest rates


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The MPC is currently considering whether the ELB for Bank Rate could be below zero; that is whether a negative policy rate could provide economic stimulus.

The effectiveness of a negative policy rate will depend, in part, on the structure of the financial system and how the policy transmits through banks to the interest rates facing households and companies. It will also depend on the financial and economic conditions at the time.

The MPC will continue to keep under review the appropriateness of a negative policy rate alongside all of its policy tools. 

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They're seeing no inflation in consumable goods and services.  They don't use asset price inflation though. 

The day they moved from RPI to CPI ad the mature of inflation it was written on the wall, stroke of a pen removed housing costs (for many three single largest item of expenditure each month) from their target.

To think, it used to be £3 to $1.

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26 minutes ago, adarmo said:

https://www.exchangerates.org.uk/articles/1325/the-200-year-pound-to-dollar-exchange-rate-history-from-5-in-1800s-to-todays.html

1950s/60s. Even in the 70s it was mid 2s.

Bit on there about the gold standard and devaluation which links nicely to TCONs gold standard nonsense. 

That reads like a broad guide on how control freaks caused every single crisis of the 20th century

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Negative rates 'under review'

The Monetary Policy Committee (MPC) said it would not even think about raising interest rates until there was "clear evidence" the recovery had taken hold.

Mr Bailey also signalled that policymakers were against using negative interest rates any time soon, adding that such a move may have unintended consequences.

It could stop the UK's already fragile banks from lending, or lead to customers withdrawing their money and holding it in cash.

Policymakers also noted that High Street banks would find it difficult to cut savings rates below zero.

"They are part of our toolbox," said Mr Bailey. "But at the moment we do not have a plan to use them."

 

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If you walk into a bank, to take peoples momey, wearing a striped t-shirt and a sack saying swag you're a criminal.

Walk into a bank wearing a suit, to take peoples money, with a briefcase its called taxation.

The rich will be totally unaffected, as their money will be carefully invested.

The poor, you got it, you're the ones now about to pay for everyone's furlough. Suckers.

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1 hour ago, Warlord said:

Negative rates bankrupt the banks (well they're already zombies) . they will never do it 

 

The Absurdity of Negative Interest Rates

https://mises.org/wire/absurdity-negative-interest-rates

Initially at least negative rates would be targeted at banks (interbank lending) and corporate lending. 

Banks have never let retail consumer rates track the BoE where it didn't suit them. Apart from a small number of lucky people on tracker mortgages, everyone else is told rates have to rflect the banks cost of doing business as well as other factors of which the BoE base rate is only a small one. 

Also a lot of banks cannot cope with negative interest rates. In the 1970s no cobol programmer envisioned this so in some cases the core systems cannot hold a negative. And banks are terrified of touching their legacy mainframe systems.

Larger banks have over a thousand systems, with tens or hundreds of thousands of data interchanges. All it takes is one of those to not manage a negative properly to flip a balance on an account on an entire system between positive and negative. 

As recently a 5 years ago I worked with mortgage data. We had a process to review all mortgage transactions in the month and remove all the entries with negative rates before a batch run because the numbers were gibberish if there were negatives in the batch. The negatives we had then were refunds, corrections and reversals of charges applied to customers accounts. 

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20 minutes ago, regprentice said:

Initially at least negative rates would be targeted at banks (interbank lending) and corporate lending. 

Banks have never let retail consumer rates track the BoE where it didn't suit them. Apart from a small number of lucky people on tracker mortgages, everyone else is told rates have to rflect the banks cost of doing business as well as other factors of which the BoE base rate is only a small one. 

Also a lot of banks cannot cope with negative interest rates. In the 1970s no cobol programmer envisioned this so in some cases the core systems cannot hold a negative. And banks are terrified of touching their legacy mainframe systems.

Larger banks have over a thousand systems, with tens or hundreds of thousands of data interchanges. All it takes is one of those to not manage a negative properly to flip a balance on an account on an entire system between positive and negative. 

As recently a 5 years ago I worked with mortgage data. We had a process to review all mortgage transactions in the month and remove all the entries with negative rates before a batch run because the numbers were gibberish if there were negatives in the batch. The negatives we had then were refunds, corrections and reversals of charges applied to customers accounts. 

I have never understood the stance of not retiring old systems. The passage of time makes it more expensive to maintain, more expensive to replace and more vulnerable to attack. These people are nuts.

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People will just go elsewhere.....the £ will lose value, savings decimated, loss of faith and confidence......good for speculators they could make a fortune...those closest to the money or debt and the knowledge win........the rest will be losers.;)

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So apart from gold which has hit a new level what do you do with say 30 or 40 ground, buy a house???

Blow half of it on fast cars and hookers and waste the rest?

premium bonds?

move to Albania and buy a village?

 

 

 

 

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