interest rates

[valB]

The Bankof England have just reduced the interest rate down to 1% so bad news for anyone who relies on the interest on savings to help their income. It seems to me that these reductions are not working and in previous reccessions the interest rates normally went up. How much lower are they prepared to go and will the banks pass this onto their customers. Even though a lot of folk in Englnd have noticed a dramatic drop in mortgage payments they are obviously not doing what the government want them to do and that is to spend, spend, spend.

[Pierre ZFP]

I know I'm a bit simple but doesn't 'Spend, spend, spend' equal 'Inflation, inflation, inflation' ?

The one and only sensible thing that Callahagn said all those years ago was 'You can't spend your way out of recession'

[Clair]

I was thinking earlier that if I had a job and a mortgage in the UK today, my focus would be on reducing my mortgage debt rather than spending in the high street.

[valB]

Exactly Clair !!  I know my kids are not spending like mad as they all have children and some reduction in their outgoings only helps them in their monthly living expences. Utilities are still high in England as are the water bills so they are not out buying everything in sight.. Maybe it is the people who have been careful with their pennies over the years and now have some savings that are the ones who are now expected to salvage a failing economy.

[baypond]

Its a mad and very bad world out there right now. A lot of people are now looking at corporate bonds or corporate bond funds to obtain higher rates, but the risk there is that the company can go bust. The main attention at the moment shouldnt be on reducing rates further, but making sure banks pass on the reduced base rates , and more importantly credit is made more freely available to corprates. I think the policy response of spend spend spend just confirms fears that we are going to enter a world depression unless there is major govt spending to try and restore some confidence.