Friday, Aug 03, 2018

Interest rate rise not tightening

BBC: Bank of England raises UK interest rates

I am pretty sure that the original plan was to retire QE first before raising rates, as otherwise it might appear that the BoE has printed money and to cover inflation raised borrowing costs for everybody else. That aside, usually for each debtor there is a creditor, in the case of QE (10 thousand apiece), there is no debtor. The money has been printed, any interest on gilts being a BoE profit is promptly remitted back to the UK government. So who is the payer of the additional interest on the fresh deposits created by QE? It seems nobody. So its hard to see how rates on savings can increase. So the wonderful BoE has increased borrowing costs but without increasing saving rates, the stick but not the carrot.

Posted by stillthinking @ 12:39 PM (1424 views)
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1 Comment

1. novice pete said...

1....Welcome to the world of free market capitalism.
2....Welcome to the new World Order mein fuhrer.
3.... Welcome to the bankers banquet, oops, security uninvited guest!

Sunday, August 5, 2018 01:36AM Report Comment
 

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