Do you think interest rates will be cut again soon?
How low will we go?
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0webscience postedI think the BoE will be keen to be seen to be doing something decisive in response to the recent 0.5% GDP drop. Markets were not expecting such a sharp decline and the BoE will want to send a strong message to the market.
Prediction: 0.5% cut in November.
Posted on 24 October 2008 |
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114ThatLindseyGuy posted
According to Bloomberg, Economists are almost unanimously forecasting a second cut of 0.5 percentage points to 4.0% at the next MPC meeting, early next month.
My own personal view is that if the coming recession is as bad as many think, interest rates may have to go as low as 2% by 2010.
Posted on 24 October 2008 | Love 0 loves
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0TMFArkle posted
I agree that further cuts in the base rate are very likely.
I suspect that Gordon Brown won't need to invoke the exceptional circumstances clause. The MPC will retain its independence.
Sure, inflation right now is high at 5.2%. But as we head into a serious recession and commodity prices tumble, inflation should fall pretty quickly. Let's not forget that the MPC's target is 2% within a band of 1 to 3%. The MPC mustn't let inflation fall below 1% and if they didn't make any rate cuts, that could happen.
It's hard to know how low the base rate will go, but you can't rule out 1.5%. Scary times.
Ed Bowsher, TMF Arkle
Posted on 25 October 2008 | Love 0 loves
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159JoeEasedale posted
I think that interest rates will be cut again - and that will make things worse, so they will be cut again etc. Might reach 0 for all I know, but the base rate cut its ties with reality months ago. Most lenders are now ignoring it anyway.
All this money that the government is pumping into the economy is inflationary as soon as it gets out into the real world. Fortunately the banks have been scared witless by the realisation that they have crippled themselves due to greed and kicking out the trained bankers and replacing them with wizzkids who did not understand their shiny new toys; so they are not lending much.
If the money does get out into the real economy then inflation racks up faster than a rat up a drainpipe.
Then, probably after a change of government or a revolution, whichever comes first, we might get some sanity into the markets by reflecting that this mess was caused by overborrowing and correct with base rates of around 15% again, until the deleveraging has happened.
Trying to kick start the economy with low interest rates is like trying to get an alcoholic cleaned up by feeding him good brandy.
Posted on 26 October 2008 | Love 0 loves
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0Fingered posted
Interest rates LAG the stock market, they don't LEAD it. - Just plot the two against each other :-)
so the question becomes how deep will the markets fall and by when? Set aside the so called expert economists and politicians who up to recently haven't even been able to agree as to IF we are going into a recession or not and even avoided using the R word never mind the D word. - Clearly they are heading DOWN. How far? - Possibly to near zero ? Impossible? - Oh really! How soon? Depends on the speed and scale of stock markets next leg of decline.
Posted on 16 November 2008 | Love 0 loves
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