Jordan has asked this question:
With the Bank of England recently announcing that the interest rate will be set at 0.5% for the eighth month in a row, do you see this as a positive or negative sign regarding the economy’s recovery from the recession. Also, how long do you think the interest rate will continue to be set at this rate?
Unquestionably, the maintenance of the base rate at 0.5% is a positive thing for the economy. A rise in rates now would be disastrous for both businesses and households in my view given the continuing levels of high debt in the UK.
I am rather less sure whether it is a positive sign for the economy. The Government continues to rely on pumping cash into the economy to stave off further recession and they could not realistically raise interest rates at the same time. Also, inflation levels remain low so there is no real urgency to increase rates.
I suspect rates will not move up for a few months at least, but don’t bank on them being this low in 12 months time.
2 responses so far ↓
George // October 22, 2009 at 1:56 pm |
I’ve read recently about the Government cracking down on credit cards, which would see borrowers being forced to pay back more of their credit card debts each month. I’m in a bit of financial difficulty at the minute, and so I couldn’t really afford to pay back any more than the minimum amount each month. Should the Government raise the minimum monthly payment, is there any way I could come to some sort of agreement with my bank about this?
Tim // October 22, 2009 at 5:08 pm |
What sort of repercussions do you think the recent postal strike could have on banks and small businesses?