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Worst of recession may be over, but then again maybe not...

The newest member of the Bank of England’s Monetary Policy Committee, which meets once a month to decide what to do with interest rates, claims that the worst may be over for Britain’s economic recession. Confusingly, however, he says that his comments should not be taken as a prediction and gives little evidence to back up his claim. David Miles, a former senior economist at Morgan Stanley will replace David Blanchflower on the MPC in a month’s time. In a press interview, Miles said “Economic history teaches us that a combination of tax cuts, running large fiscal deficits, substantial cuts in interest rates and more quantitative easing is likely, with a certain time lag, to have a substantial...

posted on: Apr 18, 2009 | author: Lance

Interest rates slashed – your savings are now as worthless as your house...

Should we be surprised that the Bank of England took desperate action today, cutting interest rates by an astounding 1.5 percent down to 3 percent, the lowest level in over half a century? OK, so it’s a massive cut and far more than the 1% which even the most dovish of market watchers were calling for, but ultimately this trainwreck of an economy is now in completely uncharted waters so why not go completely over the top? What else is left to lose? Despite strong evidence to the contrary, almost everybody seems to believe that massive interest rate cuts are a magic bullet that will re-inflate the property bubble, loosen up credit markets, get the public borrowing and...

posted on: Nov 7, 2008 | author: Lance

Are interest rates really relevant any more?...

Once a month without fail the British press gets its knickers all in a twist over what the Bank of England’s decision on interest rates will be and what it will mean for us all. But is this monthly tweaking of rates by quarter of a percent in either direction really that important any more? The newly impoverished middle classes might be hoping for a rate cut to bring down their mortgage repayments, but the rates banks and building societies charge their customers have been almost completely divorced from the Bank of England base rate over the past year. Regardless of what the BoE does, the moneylenders will set rates at whatever levels they need to keep their...

posted on: Sep 3, 2008 | author: Lance

How predictable is the economy?

On the first Thursday of every month the Bank of England’s Monetary Policy Commission (MPC) has a little get together to decide what to do about interest rates for that month, and a couple of weeks later the notes from that meeting are released to the press. Until recently these notes didn’t generate a lot of interest, but now that everything’s going to hell in a handcart, the media likes to pore over them in the hope of gaining some insight into what the MPC’s plans for the future might be. The nine members of the MPC rarely agree on whether to cut, raise or hold rates, and even when most of the members agree on a particular course...

posted on: May 21, 2008 | author: Lance