BoE slashes interest rates by 1.5%

[phykell]

I'm not sure what I think about this. I'm happy from a personal p.o.v. but I think if there was some debate about a 0.5% or a full point reduction, it seems a bit odd to go for 1.5%. To my mind, it would have been more prudent to withhold the further 0.5% for (say) a month down the road. As it is, their scope for further reductions is vastly reduced and I do wonder what sort of message this sends about the health of an economy that seems so reliant on something as abstract as mere perception.

[A Place of Light]

Originally Posted by phykell

I'm not sure what I think about this. I'm happy from a personal p.o.v. but I think if there was some debate about a 0.5% or a full point reduction, it seems a bit odd to go for 1.5%. To my mind, it would have been more prudent to withhold the further 0.5% for (say) a month down the road. As it is, their scope for further reductions is vastly reduced and I do wonder what sort of message this sends about the health of an economy that seems so reliant on something as abstract as mere perception.

Such a large drop could be construed as a panic measure and, given the way the financial sector is driven by rumour and confidence, this might not be the good thing it looks at first glance.

[dirtydog]

Debatable isn't it - the City expected 1% so whether 1.5% is seen positively or negatively was a gamble by the bank.

I think there is no doubt, if there was any before, that the economy and the property market are crashing, not merely falling.

[Pumpkinstew]

Still two years left on my fixed rate. Just means losing a few quid on my rather meagre savings.

[phykell]

Originally Posted by A Place of Light

Such a large drop could be construed as a panic measure and, given the way the financial sector is driven by rumour and confidence, this might not be the good thing it looks at first glance.

Yes, that's exactly what I thought.

The European banks have only dropped their rate by 0.5% which means the UK is running at a lower rate than Europe.

It seems a very convenient way for the banks to make hay while the sun is shining though - the lending rate is the crucial one for borrowers of course and it's this which may not necessarily reduce by a corresponding degree. The longer the banks hold on to a higher lending rate, the more money they'll generate and as far as I know, the Government has no mandate to force the issue other than asking very nicely.

[phykell]

Originally Posted by dirtydog

Debatable isn't it - the City expected 1% so whether 1.5% is seen positively or negatively was a gamble by the bank.

I think there is no doubt, if there was any before, that the economy and the property market are crashing, not merely falling.

The way such news is reported, I imagine we'll see the phrase, "smacks of desperation" or similar, bandied about in the media.

[A Place of Light]

Originally Posted by phykell

The way such news is reported, I imagine we'll see the phrase, "smacks of desperation" or similar, bandied about in the media.

The trouble here is, the media influence the masses, and the masses (or rather their actions) influence the financial climate.

[Admiral Huddy]

Originally Posted by phykell

It should be mandatory TBH and is especially ironic considering it's largely the banks who are to blame for the current situation. It was their greed and their stupidity.

Is it? You sure it's not the greed of the consumer too?

This rate cut isn't just about restoring confidence in the retail market place, but to resume stability within the banks. Once banks are confident to start lending to each other, then the economy will ease and growth can emerge.

[dirtydog]

In past recessions it has been clear with hindsight that we cut rates too little, too late. The BoE obviously wants to make sure it isn't guilty of that on this occasion. (The BoE hasn't been responsible for rates during past recessions of course, as they only gained control of them in 1997.)

[A Place of Light]

Originally Posted by dirtydog

In past recessions it has been clear with hindsight that we cut rates too little, too late. The BoE obviously wants to make sure it isn't guilty of that on this occasion. (The BoE hasn't been responsible for rates during past recessions of course, as they only gained control of them in 1997.)

No, the tories managed ALL of those recent recessions all by themselves