The Bank of England left the base rate at 0.5% once again. It has been at that "record low" level since March 2009 - that length of time at one interest rate may be a record in itself!
Most economists do not expect the rate to be changed this year, but many do expect there to be a rise in 2012 - to 1.5% by the end of the year. Pure speculation, I'd say. I don't believe any so-called experts foresaw the economic crash of 2008-9, nor expected the interest rate to tumble to 0.5% when it did. Few of them know what surprises are around the next corner.
For people with mortgages, the continuing low rate should continue to be good news, but for savers the low interest rate means that their savings are dwindling in value - especially with inflation at around 4%.
We are encouraged to save - at least in words - by politicians, but the hard monetary facts enourage us to do otherwise. It is still better to borrow than to save.
Showing posts with label interest rates. Show all posts
Showing posts with label interest rates. Show all posts
Thursday, 4 August 2011
Wednesday, 19 January 2011
Inflation rise makes interest rate rise likely
With inflation rising to 3.7% in December (up from 3.3% in November) life gets ever harder.
Costs seem to be going up all the time, but small businesses are unable to raise their prices. Inevitably profits gets squeezed.
Even worse, the rise in inflation will bring increasing pressure on the Bank of England to raise the base interest rate, which has been at its historically low figure of 0.5% since coming down to that level in March 2009. The value of the pound rose on expectation that interest rates would be rising some time soon.
Inflation has now been above the Government target of 2% for the last 13 months. (By the way, if you kept missing targets month after month, would you expect to be sacked?)
The Office for National Statistics reported that the main causes of the latest rise were air transport, fuel, utility bills and food costs. Steer clear of those, then, and you probably won't feel the effects. Good luck.
If you want a bargain, however, why not buy yourself a camera, a video camera, a TV or a DVD? They have all tumbled in price. Not exactly the kind of things you buy when times are tight, are they?
Costs seem to be going up all the time, but small businesses are unable to raise their prices. Inevitably profits gets squeezed.
Even worse, the rise in inflation will bring increasing pressure on the Bank of England to raise the base interest rate, which has been at its historically low figure of 0.5% since coming down to that level in March 2009. The value of the pound rose on expectation that interest rates would be rising some time soon.
Inflation has now been above the Government target of 2% for the last 13 months. (By the way, if you kept missing targets month after month, would you expect to be sacked?)
The Office for National Statistics reported that the main causes of the latest rise were air transport, fuel, utility bills and food costs. Steer clear of those, then, and you probably won't feel the effects. Good luck.
If you want a bargain, however, why not buy yourself a camera, a video camera, a TV or a DVD? They have all tumbled in price. Not exactly the kind of things you buy when times are tight, are they?
Subscribe to:
Posts (Atom)