ChatterBank0 min ago
Bank Interest Rates To Stay Low For Years To Come !
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The Governor of the Bank of England has given the strongest indication yet that the low interest rates that we have enjoyed for so long now is to continue for many years. Good news for the economy then...yes ?
The Governor of the Bank of England has given the strongest indication yet that the low interest rates that we have enjoyed for so long now is to continue for many years. Good news for the economy then...yes ?
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No it is not good news for the economy. Precisely the opposite, in fact.
The low interest rates which we currently “enjoy” were brought about because the economy all but collapsed five years ago. Low interest rates only serve to fuel irresponsible lending and borrowing - a principle driver of the shambles which was the 2008 "crash". Low interest rates had subsequently to be provided to enable companies and individuals to meet current expenses.
That emergency is now over and a return to normality is needed. A thriving economy needs inflation to be controlled by realistic interest rates. You will note that the new Governor supplied a caveat with his announcement today. He said that his low interest rate strategy will have to be abandoned should inflation become a problem. House price inflation is already beginning to get out of control. True inflation (not the contrived figures provided by the “independent” Office of National Statistics) is following suit. With quantitative easing, the government’s ridiculous “help to buy” scheme and seemingly endless ultra low interest rates Mr Carney may find his caveat coming into force sooner rather than later.
The low interest rates which we currently “enjoy” were brought about because the economy all but collapsed five years ago. Low interest rates only serve to fuel irresponsible lending and borrowing - a principle driver of the shambles which was the 2008 "crash". Low interest rates had subsequently to be provided to enable companies and individuals to meet current expenses.
That emergency is now over and a return to normality is needed. A thriving economy needs inflation to be controlled by realistic interest rates. You will note that the new Governor supplied a caveat with his announcement today. He said that his low interest rate strategy will have to be abandoned should inflation become a problem. House price inflation is already beginning to get out of control. True inflation (not the contrived figures provided by the “independent” Office of National Statistics) is following suit. With quantitative easing, the government’s ridiculous “help to buy” scheme and seemingly endless ultra low interest rates Mr Carney may find his caveat coming into force sooner rather than later.
Most businesses need access to capital to expand and grow NJ
It is that growth which grows our GDP and economy
A higher cost of borrowing restricts that and is *bad* for the economy
It's pretty simple
It's bad news for the financially idle who got used to the fact they could put their money in the bank with no risk at all and live off the interest
Many of them would then tell others in less fortunate circumstances that 'You can't get something for nothing'
It is that growth which grows our GDP and economy
A higher cost of borrowing restricts that and is *bad* for the economy
It's pretty simple
It's bad news for the financially idle who got used to the fact they could put their money in the bank with no risk at all and live off the interest
Many of them would then tell others in less fortunate circumstances that 'You can't get something for nothing'
You will find, jake,that it is not the cost of capital that is causing problems in the UK but access to capital. Borrowing has never been cheaper but still companies and individuals struggle to get loans. That struggle has nothing to do with the cost but with availability. When inflation becomes a problem (as it surely will in the next year or two) that struggle will exacerbate as they will need even more capital just to stay still. Low interest rates will serve to fuel that inflation and will do nobody any good in the long term. It has nothing to do with being "financially idle". It's just a matter of schoolboy economics.
Long term low interest rates cannot be good for a long term economy, just as the sky high ones we had when we were younger were not.
It's not just the 'financially idle' though Jake it tends to have a knock on effect on things like Annuities for Pensions; and there is not much you cna do about that as the law ties your hand. In addition, discouraging small savers is not good, it means people dont have a war chest when they fall on hard times (bit like your Noo Labour'
It's not just the 'financially idle' though Jake it tends to have a knock on effect on things like Annuities for Pensions; and there is not much you cna do about that as the law ties your hand. In addition, discouraging small savers is not good, it means people dont have a war chest when they fall on hard times (bit like your Noo Labour'
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