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LTNman
4th Aug 2016, 14:15
So the Bank of England cuts interest rates to 0.25%. The pound drops sharply thus putting up the cost of imports and inflation. People with money in savings will get even less return so will have less to spend which will further cut demand.

As has already been shown in countries where interest rates are already sitting around zero that it actually makes no difference to boosting their economies so why do it? Is business now going to think that the good times have returned when most people will have less money to spend due to pending inflation hitting their wages and savings?

It has also been reported that most people with mortgages won't actually see a drop in repayments so it is no benefit to them either.

ExXB
4th Aug 2016, 15:25
Yet, had they done nothing the £ would have fallen even further as they failed to meet expectations.

They should have dropped it to -1%, at least that would have got the bankers to put their money in places other than the central bank.

Andy_S
4th Aug 2016, 15:38
People with money in savings will get even less return so will have less to spend which will further cut demand.

To be honest theyíve been getting naff all for several years in any case, so in that respect it makes little difference.

While Iím not disagreeing with you, I guess the cut in rates a) encourages industry to invest, b) stimulates the construction industry (I note that shares in housebuilders are up today) and c) encourages the general public to spend rather than save.

cavortingcheetah
4th Aug 2016, 17:05
There are plenty of opportunities for saving. It's just that savings accounts aren't among them. Any risk in investing one's money in the market, always providing that research and common sense prevail (Ha!) is offset by the rapid diminution of one's fortune commensurate with the bustness of a bank.
If you'd stuck $1,000 in Hathaway in 1964, you'd have $11,600,000 this year.
$1,000 in 1990 would though be worth only a measly $33,136 today, as it were.

engineer(retard)
4th Aug 2016, 19:37
An alternative view:

The Bank of England blew it: Biggest risk is a Brexit boom, not a Brexit bust - MarketWatch (http://www.marketwatch.com/story/bank-of-england-should-worry-about-a-brexit-boom-not-a-brexit-bust-2016-08-03)

Gertrude the Wombat
4th Aug 2016, 19:56
So the Bank of England cuts interest rates to 0.25%. The pound drops sharply thus putting up the cost of imports and inflation. People with money in savings will get even less return so will have less to spend which will further cut demand.
If you really think you know better than the Bank of England you will have bet against them on the markets.


Do let us know how much of your money you put where your mouth is?

MG23
4th Aug 2016, 20:29
If you really think you know better than the Bank of England you will have bet against them on the markets.I bet against the Bank of England when they were selling gold back in the 90s. Made a few quid on that one.

They have completely stuffed up the economy by running artificially low interest rates for more than a decade just to prevent a crash that would have cost Gordon Brown his PM-ship. Now they can't raise rates, or the entire economy built on cheap credit will collapse, but cutting rates does nothing except make imports and houses more expensive. while reducing spending by those who rely on bank or bond interest for income.

They had a chance, back around 2005, to create a controlled slowdown. Instead, they went full-steam-ahead on the credit bubble.

ian16th
4th Aug 2016, 20:29
If you'd stuck $1,000 in Hathaway in 1964, you'd have $11,600,000 this year.Hands up all those with $1,000 to spare in 1964.

That was more than what we saved in 2 years living carefully while on an accompanied tour to Akrotiri.

It financed our start in civvy street.

Gertrude the Wombat
4th Aug 2016, 20:46
Hands up all those with $1,000 to spare in 1964.
I make that around 213 years' worth of the pocket money I was getting then.

G-CPTN
4th Aug 2016, 21:24
I realise that the $ is not the same as the £, but, in 1959 there were stories about the Northumbrian miners refusing to work a full week as they were able to accrue £20 for 4 days - which was a mighty fine wage back then (equivalent to £1000 per annum).
When I started work in 1965 as a graduate my first pay was £7 10s a week.

During the 1950s, the wages of miners went up from a prewar position of 84th to near the top in the league table of the wages earned by industrial workers, and by 1960, miners' wages were 7.4% above the average pay of workers in manufacturing industries.

According to another study, while the real net income of an average miner in 1957 with a wife and two children was approximately 22% above that of his male counterpart in manufacturing, that fell to approximately 2% below the manufacturing figure in 1969.

er340790
4th Aug 2016, 22:14
I'll need to check, but I'm pretty sure the BoE's Mandate is to keep UK inflation at a MAX of 1%.

So with the BoE now forecasting inflation of 2.4% p.a. in both 2017 AND 2018, it should be RAISING rates, not providing free money to already maxed-out credit and housing markets. This market ran off the cliff months ago, it just hasn't looked down yet.

MG23 hits it pretty much on the head.

(And BTW Carney was no hot-shot here in Canada. Yes, Canada did not follow the US over the cliff in 2008, but they would have done if they could - it was just that the banking business here is around 25 years behind the rest of the world. Many workers still get a weekly paycheck and visit their branches to have a person pay it in for them FFS! :mad:)

Shaggy Sheep Driver
4th Aug 2016, 22:17
From the BBC news website. Once again, thanks a bunch all you Brexiters.
Why TF did you hit the 'self destruct' button without an inkling of a plan as to where we go from here?:

Brexit latest: How is the UK economy doing?

The Bank of England has cut interest rates from 0.5% to a record low of 0.25% amid uncertainty over the Brexit process and worries about productivity and economic growth. It's the first cut since 2009. The Bank has also announced a range of measures to stimulate the economy and made the biggest cut to growth forecasts since it started making them in 1992.
Consumer confidence in the UK saw its sharpest monthly fall in July for 26 years, according to the market research group GfK.

The UK has a 50/50 chance of falling into recession within the next 18 months, going through a "marked economic slowdown", says the leading economic forecaster, the National Institute of Economic and Social Research (NIESR).

Activity among UK manufacturers contracted at its fastest pace for three years in July, says the Markit/CIPS manufacturing purchasing managers' index. It showed a fall to 48.2 - a reading above 50 indicates expansion, below 50 indicates contraction.

Activity in the UK's construction industry fell for the second month in July, according to the Markit/CIPS purchasing managers' index (PMI), with output shrinking at the fastest pace since June 2009.

Building suppliers firm Travis Perkins says the EU referendum has created "significant uncertainty" in the outlook for its business.
And London estate agency Foxtons reported a 42% fall in six monthly profits, as Brexit concerns hit the capital's already faltering property market.

Oh, and the BoE is about to start printing money again - thought we'd seen the last of that inflationary dodginess.

And, I suspect, we ain't seen nothing yet in in the disintegration of the UK economy; job losses, cuts in infrastructure investment, confidence and therefore money moving away from uncertainty (UK) and towards certainty (EU), pension fund failures, and everything a rational person would expect (and did predict!) if you cut yourself off from the mainstream we've worked with and towards for decades and drift away from its prosperity into splendid isolation and cold oblivion.

F'king stupid! (Pardon my French. I am angry that stupid people are making important decisions). I blame Cameron for letting that happen.

Gertrude the Wombat
4th Aug 2016, 22:23
I'll need to check, but I'm pretty sure the BoE's Mandate is to keep UK inflation at a MAX of 1%.
Yes, you do need to check - the target is 2%, and if they miss the target by going too low as well as too high they have to explain themselves.

Fairdealfrank
4th Aug 2016, 22:26
While Iím not disagreeing with you, I guess the cut in rates a) encourages industry to invest, b) stimulates the construction industry (I note that shares in housebuilders are up today) and c) encourages the general public to spend rather than save.

Trouble is that interest rates have been at 1.0% or less for almost a decade, with the last 7years at 0.5%.

Hasn't really worked has it?

Long term consistly low interest rates could lead to a pensions crisis.

Gertrude the Wombat
4th Aug 2016, 23:19
Long term consistly low interest rates could lead to a pensions crisis.
It's already lead to a housing crisis, as people invest their savings in houses because there's nothing else left to try.

racedo
4th Aug 2016, 23:19
While Iím not disagreeing with you, I guess the cut in rates a) encourages industry to invest

Nope makes no difference as Business is interested in Payback and 0.25% makes no difference.

Remember 11% pay increase this year at lowest level and that if following through on costs.

, b) stimulates the construction industry (I note that shares in housebuilders are up today)

Problem with that is 2 months slowdown in construction activity has already happened.

May / June / July are biggest construction months because of weather and daylight.

Fact that it hasn't happened means it follows through for rest of year and its irrecoverable.


and c) encourages the general public to spend rather than save.

With what ?

On Credit Cards at 25% plus interest ?

racedo
4th Aug 2016, 23:38
It's already lead to a housing crisis, as people invest their savings in houses because there's nothing else left to try.

Did this between 2007 and 2010 as didn't want my pensions left with City spivs.
Pension plans that are there then are still there as left them alone.

Interesting thing at that time was listening to all the experts telling me how wrong I was

Figure if things work out that will have home paid off in <10 years use pension plans to pay 30% of BTL debts and have paid off other 20% so still have debts but would manage even with interest rates at 10%. But if decide to move overseas and build on a 2 bed flat at side plus convert house into 2 x 2 bed flats then potentially even better.

Course won't work out like that.

radeng
5th Aug 2016, 00:10
Strange thing is that my BaE Systems shares have been giving a consistent 4 to 5% of share price after tax since 2009 - I can't go back any further.....

But if I put more money in them I'm damn sure that will change!

Paid my 25 year mortgage off in 11 years, but it started at 15.5% variable...Now retired and better off than when I was working.

MG23
5th Aug 2016, 00:50
It's already lead to a housing crisis, as people invest their savings in houses because there's nothing else left to try.Bingo. The world is flooded with cheap money, but there's little productive worth investing it in, so most is going into asset prices instead, making the problems even worse.

And, when companies do borrow to invest in the future, they're often spending that effectively interest-free money on automating away the humans that used to work there... you know, the ones who have to pay those ever-increasing house prices.

Krystal n chips
5th Aug 2016, 05:56
Don't worry. All will be well in Wisteria Avenue.....after all, according to a less than astute "economist" on here, Brexit was never about finance or the economy....

https://www.theguardian.com/commentisfree/picture/2016/aug/04/martin-rowson-on-state-of-the-uk-economy-cartoon

engineer(retard)
5th Aug 2016, 07:42
Funnily enough even with the Brexit Armageddon, the economy is in better shape than when the last labour government left office

http://business.financialpost.com/fp-comment/the-post-brexit-armageddon-has-been-cancelled

ATNotts
5th Aug 2016, 09:05
From the BBC news website. Once again, thanks a bunch all you Brexiters.
Why TF did you hit the 'self destruct' button without an inkling of a plan as to where we go from here?:

Brexit latest: How is the UK economy doing?

The Bank of England has cut interest rates from 0.5% to a record low of 0.25% amid uncertainty over the Brexit process and worries about productivity and economic growth. It's the first cut since 2009. The Bank has also announced a range of measures to stimulate the economy and made the biggest cut to growth forecasts since it started making them in 1992.
Consumer confidence in the UK saw its sharpest monthly fall in July for 26 years, according to the market research group GfK.

The UK has a 50/50 chance of falling into recession within the next 18 months, going through a "marked economic slowdown", says the leading economic forecaster, the National Institute of Economic and Social Research (NIESR).

Activity among UK manufacturers contracted at its fastest pace for three years in July, says the Markit/CIPS manufacturing purchasing managers' index. It showed a fall to 48.2 - a reading above 50 indicates expansion, below 50 indicates contraction.

Activity in the UK's construction industry fell for the second month in July, according to the Markit/CIPS purchasing managers' index (PMI), with output shrinking at the fastest pace since June 2009.

Building suppliers firm Travis Perkins says the EU referendum has created "significant uncertainty" in the outlook for its business.
And London estate agency Foxtons reported a 42% fall in six monthly profits, as Brexit concerns hit the capital's already faltering property market.

Oh, and the BoE is about to start printing money again - thought we'd seen the last of that inflationary dodginess.

And, I suspect, we ain't seen nothing yet in in the disintegration of the UK economy; job losses, cuts in infrastructure investment, confidence and therefore money moving away from uncertainty (UK) and towards certainty (EU), pension fund failures, and everything a rational person would expect (and did predict!) if you cut yourself off from the mainstream we've worked with and towards for decades and drift away from its prosperity into splendid isolation and cold oblivion.

F'king stupid! (Pardon my French. I am angry that stupid people are making important decisions). I blame Cameron for letting that happen.

I agree with you.

engineer(retard)
5th Aug 2016, 10:07
So wevare now reduced to a 50/50 chance of a mild recession instead of financial meltdown. What changes to your lifestyle have you been forced to make SSD and ATNotts?

Seldomfitforpurpose
5th Aug 2016, 11:38
None I would suggest, just a couple of classic Remoaners basking in their imaginary plight.

We just got back from 14 weeks touring France, Spain, Switzerland and Luxembourg in our Motorhome and we are less than £100 out of pocket due to exchange rates

Toadstool
5th Aug 2016, 12:26
What changes to your lifestyle have you been forced to make SSD and ATNotts?

Ive just returned from working in Europe, and the changes to currency rates has hit me and my colleagues quite hard. I had to seriously think about having less beer at times.

Shaggy Sheep Driver
5th Aug 2016, 12:27
Retard, you ain't seen nothing yet. So far the economy is, as ably predicted, locked into a steepening dive for all the solid reasons the experts gave (but were dismissed 'because experts are always wrong' :rolleyes: ).

It hasn't hit the ground yet, but it will.

Shaggy Sheep Driver
5th Aug 2016, 12:29
Just got back from 2 weeks around Germany. They just can't belive how stupid we were to press the self destruct button, especially with alternate plan in place.

Also had to pay a currency surcharge on the cost of the holiday, and got lousy rate on £ / Euro exchange because of this stupidity.

larssnowpharter
5th Aug 2016, 12:40
I had to seriously think about having less beer at times.

Jeez, I didn't think things were that serious!

engineer(retard)
5th Aug 2016, 15:54
So SSD, you are just practicing being hysterical in case it gets bad?

Geordie_Expat
5th Aug 2016, 16:06
So SSD, you are just practicing being hysterical in case it gets bad?

I see SSD is back as a probie. Wonder why he was out in the wilderness ?:rolleyes:

Seldomfitforpurpose
5th Aug 2016, 16:08
Also had to pay a currency surcharge on the cost of the holiday, and got lousy rate on £ / Euro exchange because of this stupidity.

Got back yesterday from a euro tour in the motorhome, set off in late April. We reckon the whole exchange rate thing has cost us less than £100 in all that time of buying food, fuel and paying for campsites etc etc.

That is less than we would pay for a return train ride to Bath from Chippenham, an afternoon of beers etc, dinner in Bath, a couple of night caps once back in Chippers then a taxi home..............kind of puts all this faux hysteria into perspective :ok:

pax britanica
5th Aug 2016, 16:54
i work for the bank of England but often visit these pages as i fly a lot. It seems to me you pilot chappies dont know as muchas i think you should about flying airliners.

Forgotten the basics of flight, always over tired, cannot agree on what to do in an emergency .

Actually we have a little avaition section in our house magazine, its very useful for telling people in other industries how to do their job, its meant to be tongue in cheek of course but then its so easy to be an expert on things you dont understand that ist hard not to share that knowledge.......

D SQDRN 97th IOTC
5th Aug 2016, 19:25
Economy in steepening dive
Self destruct button
Stupidity

For those that expect the economy to crash immediately.....you will be disappointed.
But when investment stops....it will show in the economy sooner or later.
So challenge for the politicians is to ensure the investment doesn't stop. Corporate tax cuts and relief for investment is one option.

And all can appear good superficially, but underneath a canker is lurking...eating away.

And FWIW
BoE didn't sell the gold upon its own initiative. That was a government decision, a labour government.
For those that say low rates aren't working....they propose that high rates should be put into place ?
Low rates cause pension crisis? Only if you want to buy an annuity.....they always were appalling value with a 40% profit margin to the insurers and still are. Just don't do it. Use drawdown IMHO.
A lot of Irish think the answer lies in property. A lesson this country learnt the hard way when their property bubble burst. Many an unexperienced property developer went bankrupt on a wave of east credit. ECB interest rate rises will see many go to the wall again.
And borrowers spend more than savers.....

Talking down the economy will become self fulfilling.....UK has been liberated from a sinking EU. Remember the PIGS ? EU spent billions bailing them out. Italian banking problems may make the crisis of the last decade seem like a tea party in comparison.

Shaggy Sheep Driver
5th Aug 2016, 20:42
I see you are still in denial, retard. I wonder how long that will last as the UK economy crumbles around you. My earlier post gives all the evidence you need that that process has started in earnest.

But even as it's happening, you'll probably put your fingers in your ears and your hands over your eyes and shout 'Project Fear' as often and as loud as you can.

Simplythebeast
5th Aug 2016, 20:50
Don’t blame Brexit for this rate cut. Blame Project Fear - The Telegraph
https://apple.news/AQJZd9YbNQySGhZ0Bsm3zzg

Shaggy Sheep Driver
5th Aug 2016, 21:56
No point me posting here - they just don't appear! ******* ridiculous, Bye!

Fairdealfrank
5th Aug 2016, 22:49
I see SSD is back as a probie. Wonder why he was out in the wilderness ?

How did that happen? SSD has been on here for ages, hardly a probationer.

racedo
6th Aug 2016, 11:22
Corporate tax cuts and relief for investment is one option.


There is already relief for investment, companies who invest set off that Investment against tax.

As for Tax cuts......................... all that will happen with tax cuts for business will be NOTHING, aside from Govt with a huge deficit needing to raise it elsewhere.

racedo
6th Aug 2016, 11:33
Don’t blame Brexit for this rate cut. Blame Project Fear - The Telegraph
https://apple.news/AQJZd9YbNQySGhZ0Bsm3zzg

Its Project Reality where companies look at future prospects and realise that the Uk is turning against "the working immigrants" who take the low paid jobs that locals refuse to do.

Shirebrook was a shithole with closed shops and nobody investing in anything before Sports Direct built a warehouse, however its still a shithole which has had lots of investment and jobs created which locals don't want to do.