Interest rates up

[JohnD]

Bank of England raises interest rates to highest level since 2009

Decision to lift benchmark rate to 0.75% was unanimous among policymakers on the MPC

https://www.ft.com/content/69f84b2c-9641-11e8-b67b-b8205561c3fe



No doubt mortgage, loan and credit card rates will shoot up, and savings rates won't

"The pound initially rose following the announcement, then fell 0.5 per cent against the dollar during BoE governor Mark Carney’s press conference, to $1.305 — a lower level than before the rate rise was announced."

 

[Notch7]

Does it mean much?

 

[JohnD]

Anyone who's only had a mortgage for a few years, or went for interest-only, should prepare for hard times.

 

[Notch7]

I remember when the UK tagged to ERM......

 

[JohnD]

I've heard tell of Thatcher's child-like version of Monetarism, when she tried to suppress house prices in London and the South East by winching up interest rates, and driving much of British industry into bankruptcy. And many homeowners couldn't manage 15% interest and lost their homes.

 

[ellal]

I remember when the UK tagged to ERM......

Deja vu?

Normally when interest rates go up so does the local currency...

So what happened today?

The pound went down!

The lesson from history is that you have to have an economy worth investing in to keep a currency strong.

And Brexit sure ain't gonna provide that!

Mogg will have made a few bob though!

 

[Notch7]

Deja vu?

Normally when interest rates go up so does the local currency...

So what happened today?

The pound went down!

The lesson from history is that you have to have an economy worth investing in to keep a currency strong.

And Brexit sure ain't gonna provide that!

Mogg will have made a few bob though!

I see your analysis is an over simplification

The decision to raise interest rates means the UK's basic interest rate is finally raised off the floor that was put in place in the wake of the global financial crash and ensuing recession.

"This is hopefully the first step on the road to a more normal level of interest rates - following the lead from the US Federal Reserve. The UK economy is now in the tenth year of economic recovery and the unemployment rate is at its lowest level for over 40 years. So there is no obvious reason for delaying the gradual rise in interest rates which the MPC has been talking about for some time," says Andrew Sentance, senior economic adviser at PwC.

Sentance, a long-time critic of the Bank's ultra-low interest rate policy, adds businesses and consumers should be able to adapt to a well-communicated and gradual series of interest rate rises, after nearly a decade of exceptionally low borrowing costs.

"Higher interest rates should also provide some much-needed relief to savers who have seen their investment returns eroded significantly since the financial crisis," says Sentance

 

[ellal]

I see your analysis is an over simplification

It is though the reality!

And what happened to your telling us of the dire economic situation that Euroland is in?
How did the Euro fare against the pound on news of a rate rise here?

Basing your argument on a PWC report is, dare we say it, scraping the barrel of incredulity!

 

[Notch7]

Basing your argument on a PWC report is, dare we say it, scraping the barrel of incredulity!

Perhaps we should base it on a report you have linked, to prove your point.

Oh thats right, you havent

 

[big-all]

I remember when the UK tagged to ERM......

i had a mortgage from the early 80 with something like a 12% interest rate
in 92 i was a train driver and was on several trips to london bridge during the day
we where in the erm then and on that day nigel lawson was trying to keep the pound with the requirements to stay in the erm by increasing interest rates
each trip about 2 hrs apart the interest rate was going up by around 1.5-2% every trip
by the third trip it was around 17% and thankfully we left the erm as the interest rate increase had not bolstered the pound
https://en.wikipedia.org/wiki/Black_Wednesday

 

[JohnD]

lawson

lamont

https://www.telegraph.co.uk/comment...a-surgeon-realising-the-patient-was-dead.html

No doubt notch will try to tell us that Thatcher, Major, Lawson and Lamont were Labour politicians.

 

[EddieM]

a 25 basis point raise is not significant, had a look through the history on GD no one has commented on the rise from 25 basis points from 0.25 to .5. As you all were.

Edited: Smartphone, not the best tool and again.

 

[JohnD]

a 25 point raise is not significant

One of them isn't. Three are a bit of a clue. How many more will there be? I reckon about 16 more. Maybe 20.

 

[EddieM]

One of them isn't. Three are a bit of a clue. How many more will there be? I reckon about 16 more.

I have no idea, but then again.. nor do you.

 

[JohnD]

I do have a clue It tends to be within a couple of points of the inflation rate (except during Thatcher's day). I don't have the charts to hand.


I live in a small road where almost all the original residents had to sell up and move out during the Thatcher Interest Rate disaster.

I think it must have been about 1990. https://www.bankofengland.co.uk/boeapps/iadb/Repo.asp

She wasn't much loved round here.