Posted by Nicole
A day after the Bank of England surprised everyone with an unprecedented 1.5 percentage point cut in interest rates there is little optimism being shown for the move.
UK Media Coverage:
FT Columnist Martin Wolf congratulates the MPC on the bold move but sees no sudden resurgence of lending between banks on the horizon:
Many commentators are looking at the role banks now have to play following the cut:
The Mail has also chosen to take a look at what was going on around the world the last time interest rates were this low.
Also on the Web:
- John Redwood’s Diary: When will the banks work again
- Comment is Free: A once-in-a-generation downturn (Gavyn Davies)
- Economics Help: Drastic measures for desperate times
- The Mess That Made Greenspan: More cuts around the world
- Institute of Economic Affairs: BoE shouldn’t try to stave off recession
- MSN News search: latest on the interest rate cut
Financial matters are not my strong point – I tend to take a bury- my-head-in-the-sand approach to our finances. My husband is an accountant and we always say that we’ll let me handle the words and he can do the numbers. However, we have our own home and we also have three buy-to-let properties, so anything that could bring our monthly mortgage payments down is a relief for us. It’s not good news for savers though, I know. It feels like this is the beginning of a very long haul and I’m very glad that I’m off to live in the Middle East from the end of year!
Savers and borrowers are debating the cut on our message boards. sort_it says: “I have only recently become a pensioner, and since the kids left home many years ago I have never borrowed money, purely because I know in the end I would be in a mess when the time came for me to retire. I have no mortgage or owe anything on credit cards. Where has it got me now? My savings which I have been putting away for my retirement are now attracting very low interest, my shares I bought with my employer are practically worthless. So much for keeping yourself out of debt.”
While this from sulleejeebaby sums up the feelings of many others: “It’s all well and good bringing the interest rates down but when will this be reflected with my mortgage lender?? I’m on a high interest rate and am fed up to the ears of paying over 7.5% in interest repayments….when will Libor rates be reflected with the same fall in rates??? This is key and nothing else matters.”
What’s your view on the issue? How low should rates go? What do the banks have to do now? Have your say on our message boards or leave a comment below.