Uk Interest Rates Cut To 0.25%

[mikey4444]

http://www.bbc.co.uk/news/business-36976528

I am not really sure what the Governor of the Bank of England is trying to do here .....can anyone please explain ?

[fiction-factory]

Encourage spending rather than saving.
Reduce mortgage rates so put more money in pockets .
Make it less expensive for businesses to borrow.
Would you have put them up, mikey?

[mikey4444]

FF....I am not an expert in this field !

But rates have been terribly low for years, and I'm still not sure what will be achieved by this latest drop.

[ToraToraTora]

my mortgage is now less than my council tax! Who'd have thought it! anyway mikey, we are in danger of deflation, thus the government wants us to spend spend spend. As a Labour man should ring well with your good self.

[Gromit]

Whaoo!!
The economy is booming!!!

[mikey4444]

TTT...if I had some money, I might be tempted to spend it !

[fiction-factory]

Maybe reducing to zero would have had more impact but I suppose he wants to keep something up his sleeve, and I think the fear of negative interest rates could have caused fear/panic. It may only seem a small change but you could argue it's a drastic change in that it's halved the rate for some borrowers

[mikey4444]

Gromit...if you read the link, you will see that the economy is far from booming.

[ToraToraTora]

It could be worse, the germans went negative last month and The kitchen taps have been well used to negative interest rates. They want to discourage saving, well as cash anyway.

[ummmm]

I'm the same as TTT...our mortgage is less than our council tax. It'll be paid off in 4 years and then I'll be cursing the interest rates.

[Old_Geezer]

Monetary policy. Steal from the savers to give to the borrowers so they grab the cheap money and invest to make the economy grow.

Except we were already at 'screw the prudent citizens' rate and and have been for ages; so I'm unsure how much advantage there is to trying to screw them more. They only have a further ¼% of disdain to go anyway then they run out of manoeuvre room.

[Old_Geezer]

People can not spend spend spend if the income that they are trying to live on is reduced to zero. Besides if there is such an issue that the bank tries this sort of thing, best put as much away as possible as something seems to be up, Invest in a new thicker mattress only.

[fiction-factory]

Why are we screwing the savers, O_G? Real savings rates seem pretty high- you can still get 3% for example with Santander. Do we need to earn interest on savings that is greater than the rate of inflation?
But hitting savers is the motive. The econony needs savers to spend more

[mikey4444]

Ummm and TTT. I wish that was true in my case. My mortgage is just under £400 a month but my Council Tax is only £71 a month !

But the mortgage will be gone in 22 months time....thanks god !

[ToraToraTora]

It's ironic ummmm that when I first had a mortgage, it was by far my biggest outlay and how I wished to be free of it. Now it's not my biggest bill and all my other bills will never go away. So to anyone on here wish their mortgage would go away, be aware that it at least can go away your other bills only grow.

[fiction-factory]

Intertst on savings is only worth having if you have over £20000. If the rate of interest falls almost to zero then why keep a large stock of savings- just draw down on your savings in these circumstances

[Old_Geezer]

3% is utterly pathetic.
Tell me when it's 10 to 13% gross minimum.
(I can't see any businesses settling for just 3% profit per annum.)

[ummmm]

Our mortgage is £120 and council tax £126.

[mikey4444]

I had my first mortgage in March 1979. Interest rates then were at least 15% or even higher. For at least a year or two afterwards, my mortgage payment was about 50% of my take-home pay, and I really struggled.

[fiction-factory]

Why is 3% pathetic, O-G, when inflation is zero If you have savings, spend some of them- that's the idea.
If banks had to pay 13% then lending rates would have to be at a similar level. That would be catastrophic?

[mikey4444]

Another helpful BBC link :::

http://www.bbc.co.uk/news/business-36973936

According to this, £10,000 invested in a typical easy-access account will now earn only £40 per annum gross interest.