Thursday, August 5, 2010

UK Base rate remains at record low

Interest rates kept on hold at 0.5%

The Bank of England has voted to keep interest rates on hold at 0.5% amid concerns over the strength of the economic recovery. The decision by the bank's Monetary Policy Committee (MPC) means rates will stay at their current record low for an 18th month. Inflation remains well above the bank's target rate of 2% on the Consumer Prices Index (CPI) measure, at 3.2%. Meanwhile recent economic data has cast doubt over the strength of UK economy.

Posted by jack c @ 12:05 PM (4244 views)
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34 thoughts on “UK Base rate remains at record low

  • What’s the point of the MPC. May as well use that Octopus that predicted the world cup scores.

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  • sibley's love child says:

    What a joke; had anyone told me in 2008 that IRs would be held at near-zero for 18 months I would have questioned their sanity.

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  • Zombie banking

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  • Cilla ‘ere “surprise surprise”

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  • Keeping interest rates low i guess keeps families in their homes and banks solvent. What proportion of the public are savers these days anyway?

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  • Martin Lewis (the so called Money Saving Expert) has just been commenting on radio 5 live that savers are now locked in hell over rates. There is not one savings account after Tax that offers a return above inflation (RPI) and with the withdrawal of NS&I indexed linked savings certs Savers are effectively stuffed all ends up.

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  • it just goes to show how the bank of england is not independent and does not work within its remit.. Pure corruption rife throughout the economy.

    King will be long gone in his tomb when the next generation pay off this countries debt and all live in tents

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  • I have heard there is an unwritten agreement between the current Gov & BOE that the latter will keep rates on hold if the former genuinely deals with the deficit. Looks like the remit of targetting CPI is well and truly out of the window.

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  • wonder what the odds being given at the bookies for a rise in rates

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  • it_is_going_with_a_bang says:

    You can get something in interest for savings if you do the work and shop around – just don’t expect your own bank to help you out of kindness.

    As far as big picture is concerned I don’t wish to have high interest rates I just “wish” there was another perceived system in place in this country other than interest rates to control house price inflation.

    A well thought out policy is required. Build more social housing for start. Control immigration ( not stop it before anyone moans ) and have a well thought out tax policy that gives private house buyers an advantage over BTL.

    I would start by forcing BTL to take repayment lending on any new commercial mortgages.
    Abolish the ability of landlords to have portfolios based on interest only lending.
    Tax landlords based on rental income not profit.

    Something radical has to change to level the playing field. Not just relying on base interest rates.

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  • @6. jack c…

    Which means you either lose your money slowly via the inflation differential or you game your money in the various casinos (stock, forex, gold, etc) with no guarantee of winning. The other choice is to buy a house and hope somehow inflation offsets the fall in value.

    3 years into this crisis and we are now in worse shape than we were at the start of it…

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  • So the banks will continue posting mega profits on the practically free lending while the proles suffer… sigh

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  • You will all be buying tin foil soon enough. Just a question of time and a little reflection on the many historical monsters that have and still

    to this day roam our planet, or is it their planet.

    “In our dreams, people yield themselves with perfect docility to our molding hands. The present education conventions of intellectual and character education fade from their minds, and, unhampered by tradition, we work our own good will upon a grateful and responsive folk.
    We shall not try to make these people, or any of their children, into philosophers, or men of science. We have not to raise up from them authors, educators, poets or men of letters. We shall not search for great artists, painters, musicians nor lawyers, doctors, preachers, politicians, statesmen — of whom we have an ample supply.
    The task is simple. We will organize children and teach them in a perfect way the things their fathers and mothers are doing in an imperfect way.”

    John D. Rockefeller sn.

    NO CHANGE….Carry on!

    The fool on the hill. 🙁

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  • If inflation being outside of this target is important enough for King to write an explanation to the Chancellor then why isn’t it important enough for them to hit this target range. I can understand the need to be over it/under it on occassions but it seems for some time now that the BOE are consistently missing this target and if this is one of their key objectives they are therefore consistenly failing to do thier job.

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  • mrflibble – I think you have summed the situation up very well – little for me to add to your comment other than a further 3 years down the line we will be in even worse shape (due to the effects of the proposed cuts)

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  • Two men are out just fishing quietly and drinking beer.
    Almost silently, so as not to scare the fish, Bob says,

    ‘I think I’m gonna divorce my wife.

    She hasn’t spoken to me in over 2 months.
    Rod continues slowly sipping his beer then thoughtfully says,
    ‘You better think it over, Bob.
    Women like that are hard to find.

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  • going_with_a_bang – couldn’t agree more. And mrflibble. The problem is they don’t want us to save, they want us to spend spend spend and keep the party going.

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  • sibley's love child says:

    Tom101 @ 5

    Despite the fact that there’s an inverse correlation between the two?

    In any event, at what cost; the Herald Scotland article (linked by debtfree) sums-up the situation succinctly. And, yes, a few people may have temporarily avoided repossession; but how long for?

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  • I am shocked!

    Shocked that the +independent+ Bank of England has decided to leave interest rates at 0.5% when the CPI is well over their own limits.

    But in truth it’s just what I’d have expected. Inflation suits politicians. Always has. Always will.

    Make no mistake though, if you’ve got any savings denominated in sterling they will go up in smoke. What we ar elooking at is a replay of the Weimar Republic in slow motion.

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  • @18. sibley’s love child, Sorry being a bit facetious there.

    Perhaps we could take the BoE to court?

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  • Mervyn is playing with fire. His goal is to keep interest rates low for unlimited time. This is what America has done and now they have run out of tools except money printing. Two or three years from now we will be talking hyper-inflation and I have excluded appreciation/depreciation of the pound as being a sound technique to control inflation.

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  • The interest on £10k savings will buy you a pint of beer every month. What are savers moaning about?

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  • sibley's love child says:

    Ah, sorry Tom, my sarcasm-reader needs fine-tuning.

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  • Kept on hold again as I predicted – but it will be interesting to see the minutes of the meeting.

    I don’t think there’s any conspiracy between govt and our Merv – if anything, there’s a little hostility evolving between the Treasury and BoE.

    Influencial elements within the Tory party are not at all happy about savers being fleeced; while our Merv gives the impression of being indifferent on that score..

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  • I only hope that people are beginning to realise that Mervyn King is an incompetent fool – whose expertise and views are highly, highly questionable. His predictions has been completely wrong many, many times over.

    He should have been thrown out with Gordon Brown – one of the key architects of the current instability.

    They won’t raise interest rates for many years, as we are now heading for another recession.

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  • The government and boe are simply trying to protect a system that is obviously broken. But in whose interest? Someone mentioned that if someone had said a couple years ago that interest rates would be kept at historic lows for 18 months, he would have considered them to be insane. So have we got lunatics in charge? Or is there method in their madness? Who knows? Who really cares? If we thought we were out of the financial maelstrom, the latest actions of the boe and new government indicate that we are far from finished.

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  • Come On Down says:

    The main remit of the bank is economic stability/growth.

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  • I think Merv and Darling did the best that they could. It could be a lot worse and could get a lot worse.

    What I find a little concerning is that some central banks are raising interest rates in fear of inflation whilst others are keeping them low fearing deflation.

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  • Moan, moan… *cough*bank run*cough*.

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  • Does anyone know – do the MPC members have to make declarations about their assets? If not they should go public on their own/relatives mortgage obligations and their investments should be put into blind trusts.

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  • A two-tier economy becomes clearer each month. The reckless few makes billions on the casino wheel while 99% of us are trapped in a stagnant economy propped by Merv & his mates that the billionaires won’t lend to because they don’t want to lose their money, who could blame them eh? .

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  • letsgetreadytotumble says:

    I’ve emailed my MP. Easy to do on t’internet.
    Maybe a waste of time, but if a lot of people did this………

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  • Banks are making money again at athe cost of savers. This is not fair. I think there should be some balance. King should go.

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  • mountain goat says:

    Holding down IR discourages people from saving so they will pay off debt instead. This collapses the money supply, is deflationary, and a self defeating policy when faced with a severe recession.

    Keeping insolvent people in their homes with artificially low IR is self defeating for a similar reason. They are kept in their unaffordable homes to pay off their mortgage, paying money to the bank, and therefore cutting other discretionary spending which is the driver of the economy.

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