Wednesday, October 8, 2008

BOE cuts rates to 4.5%

Bank of England in shock rate cut

Central banks doing a coordinated rate cut. BOE say inflation will hit 5% "in a month or 2"

Posted by still renting @ 12:07 PM (2439 views)
Please complete the required fields.



34 thoughts on “BOE cuts rates to 4.5%

  • still renting says:

    ECB and the Fed have also cut half a point.

    Reply
    Please complete the required fields.



  • BOE say inflation will hit 5% “in a month or 2”

    Is that because of what they’ve done or despite it?

    Reply
    Please complete the required fields.



  • Eyes_wide_open says:

    Looks like panic in the “wonderful” world of Western Capitalism.

    Reply
    Please complete the required fields.



  • it worked for the fed, did it not! oh dear.

    Reply
    Please complete the required fields.



  • No real shock (IMO) widely debated this week and in the City plus Gilt market movements suggested a cut of this proportion.

    Reply
    Please complete the required fields.



  • Time to get locked into some high interest bank accounts. What did I do with that application form for the Bank of Nigeria 8.5% 1 year bond?

    Reply
    Please complete the required fields.



  • this will make things worse

    Reply
    Please complete the required fields.



  • “BOE say inflation will hit 5% “in a month or 2″”

    Is that because of what they’ve done or despite it?

    Reply
    Please complete the required fields.



  • Surely with all this loss of liquidity & bankruptcy, the cost of money should be Higher not lower?

    Reply
    Please complete the required fields.



  • inflation running at double the required target and they cut rates ?

    more economics from La La Land.

    Reply
    Please complete the required fields.



  • Screw inflation lets keep cutting.

    Reply
    Please complete the required fields.



  • I can’t see this really helping, we all know that these sort of changes take months if not years to filter through. Besides this is only going to leave us more exposed to inflation, which in turn will drive down production through incresed costs.

    Still, with any luck a fixed rate mortgage will be at a better rate, in that sense I am happy for them to cut it again and again and again… well as long as the banks pass on the cuts. Oh.

    Reply
    Please complete the required fields.



  • Agree all

    A cut is to show to the sheeple they’re trying.

    What they should do is transmit a broadcast to the sheeple and explain to them why they shouldn’t cut rates.

    Reply
    Please complete the required fields.



  • Quick – more heroine to stop the junkie shaking

    Reply
    Please complete the required fields.



  • notaneconomicsguru says:

    I don’t get it either. I can’t understand why this is necessary. Both Vince Cable and Will Hutton were asking for this on TV last night and were not seriously challenged. Cable said it was needed because the ‘money supply’ has collapsed and we should now forget about inflation.

    This made me frown. Yes, the rate of new loans is vastly down – I think that’s what is meant by ‘M3’ money supply based on fractional reserve bancking – but that’s not because interest rates are too high. As far as I understand it is because of a lack of confidence and the need for banks to now hold capital and to minimise their exposure risk.

    I am puzzled by Cables remarks – as far as I know ‘M0’ has not gone down – after all BOE has had its special liquidity schemes etc. etc. That said, I can see that reducing the BOE rate will make it cheaper to get money from the central bank, which presumably then inflates the econonomy and devalues the currency. However, won’t retail banks now just reduce savings rates but not reduce lending rates? I can’t see this will help either the banks or the economy at large. It just seems to me to be completely the opposite of what is needed. Can someone explain please??

    Reply
    Please complete the required fields.



  • What shock….

    This has been predicted for days. The monetary system is in total dissarray. The debt mountain is massive and we all all in for a messy ride.

    Heads should roll, the blubbermint should resign and the new governemnt should implement a protectionist attitude to prevent as much damage as possible. Globalisation is here to stay but individual nations should resolve to control their own markets and finacial systems much more closely.

    Regulation of the financial system should be pursued with as much vigour as the abolition of slavery was in the 19th century. Money has to be a valid and valuable system for both the creation of wealth and the control of such complex entities as economies. It isn’t rocket science, it is just complicated. Financial control need to be evaluated and removed (as much as possible) from the political agenda.

    Property is one of the most tangible assets the world has. It has to be the cornerstone of sound economic growth, not a friggin piggy bank to continually and exponentually borrow from. We are now, undoubetdly in the “Japanese” scenario of a deflated housing bubble that will continue for years.

    The desire to go on expensive international holidays, owning 2nd homes, changing your car every 2/3 years, changing your telly every 2/3 years and changing your wardrobe every year are (or should be ) things of the past.

    We need Land Value Tax and a presumption that working is a desired state of being, get the millions of lazy bastids off benefits and implement serious wage controls (including raising the minimum wage to a level where people can survive). If house prices go up more than 10% in any year on year figures, then Interest rates should go up automatically.

    Reply
    Please complete the required fields.



  • i seem to remember correct if i am wrong.

    Japan cut rates in last crash and it DID NOT WORK (can anyone else remember what the fools did at the time)

    the current bailout in the states is not working and is adding the $53trillion debt

    why would a uk or world bailout work? it wont.. simple let them crash and burn, it is only way to get this scum rubbish business out…

    Reply
    Please complete the required fields.



  • mountain goat says:

    @Mark 12.28 Japan is the only one that didnt cut because they are already so low. They could make it a negative value and pay people to borrow money!

    Reply
    Please complete the required fields.



  • notaneconomicsguru says:

    17. Mark.

    Yes as far as I recall Japan even had not just a low interest rate policy but a 0% interest rate policy for years and years and it was all seen
    to be not to have not been a very effective instrument. That was the other thing that caused me to shout at the supposed experts on the telly

    Reply
    Please complete the required fields.



  • Hmmm ; )

    Reply
    Please complete the required fields.



  • This approach just changes the problem timescale from 1 year to 10. Goodbye pound we will miss you.

    Reply
    Please complete the required fields.



  • The punishment of the savers begins.

    Reply
    Please complete the required fields.



  • @21. renting2 said…

    “The punishment of the savers begins”

    Or it could be punishment for banks, whats the point of holding cash in a bank anymore when inflation is higher than rates.

    Im going to withdraw all of it now, no point anymore, who needs a bank when its losing you money ?

    Surely premium bonds are a better bet ?

    Reply
    Please complete the required fields.



  • Stupid Stupid Stupid – it takes 6 – 18 months for Interest rates to have there full impact, so a pointless excersize except to try and keep the Stock Market happy and make it look like they are doing something.

    Banks should be allowed to fail or be bought out, Interest rates increased to reward and encourage saving and debts need to be paid or defaulted. Simple Solution. Fail to do that and it will get worse and last longer.

    Reply
    Please complete the required fields.



  • Land Value Tax is the only solution.

    It is the reason Honk Kong has had the foremost global economy for the last 16 years.

    How do we implement it?

    Reply
    Please complete the required fields.



  • mountain goat ::: I was talking about the 80’s early 90’s

    Reply
    Please complete the required fields.



  • renting2 @ 22

    The saver has been punished for years – Interest rates were too low

    notaneconomicsguru @ 19..

    I beleive that Japanese interest rate (partly) helped fuel this global bubble. I wish I’d known. Borrow money at 0%, lend it at 3 %. Borrow £30 million , lend it and make nearly 1 million a year. A complete no brainer.

    Reply
    Please complete the required fields.



  • Eyes_wide_open says:

    “Or it could be punishment for banks, whats the point of holding cash in a bank anymore when inflation is higher than rates.
    Im going to withdraw all of it now, no point anymore, who needs a bank when its losing you money?”

    Good point, I’m in. If they haven’t got my cash, they can’t lend it out another nine times.

    Reply
    Please complete the required fields.



  • notaneconomicsguru says:

    25. noneo

    I think that’s what the so called “carry trades” were/are about.

    Reply
    Please complete the required fields.



  • @debtfree: Premium bonds have a theoretical 3.4% interest rate. The chances of achieving this amount depend greatly on how much you put in. See the Premium Bonds Calculator at http://www.moneysavingexpert.com/savings/premium-bonds-calculator/ to work out what return you might see.

    If you haven’t invested in a cash ISA this year, one of the fixed-rate products like Northern Rock’s 6% might be beneficial. You can also get 6%+ general savings accounts (watch out for ‘introductory bonus’ rates) or fixed-rate bonds.

    As for general economic conditions, the oil market is rapidly correcting itself – now down to November 2007 prices, down 59% from the July 12th-16th peak of $142 to $84 today (Brent index). However, many goods coming on the market now have the energy price locked in from months ago, so price increases are still possible for the rest of the year before they should start falling again, although transport costs should start to fall again (this relies on companies to pass on cuts in input prices, of course). People are paying down their debts, and taking out fewer loans, which means the money supply is shrinking, so we’re really in deflation.

    Reply
    Please complete the required fields.



  • Biggest shock of all is that HBOS didn’t get their HPI figures out the same day as the rate decision this month!!! unless of course they are going to cut them again tomorrow!! Market is still down 100 points so they probably will. I’m going to sell my children.

    Reply
    Please complete the required fields.



  • Cutting rates is the only reasonable thing to do at present. Companies and mortgage payers have it so tight at present that reductions in rates are necessary to help minimise the coming recession.

    Reply
    Please complete the required fields.



  • how will this effect the prices of houses???

    Reply
    Please complete the required fields.



  • amjidk

    Personally I’ve seen a few asking prices drop from ridiculous to very unrealistic levels over the last few months but no drops in the last month or so.

    I think we’ve currently reached the stand off/ stale mate situation.

    I believe we will only see a downward motion through forced sales with the constant propping and interest rate dropping giving home owners false hope of a recovery.

    This economy can’t start to recover until house prices reach a sustainable level of about half what they were. IMO (although I still predict 25% fall on Land Registry figures).

    The constant meddling will IMO delay the inevitable.

    I suspect there’s still a few months left before we see really significant falls in the New Year. However there are 2 dangerous people with nothing to loose at the helm so almost anything could happen to try and delay the inevitable.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>