Nothing has such a dramatic effect on your finances as the Bank Rate. A decision taken by a committee of nine men at the Bank of England once a month influences the cost of your mortgage, the pricing of savings rates and the interest you pay on your credit card.
But that's nothing to the headwinds or tailwinds that the rates policy applies to assets, such as property, shares and bond markets. Or the impact it has on Britain's currency – the fall in sterling has effectively left us all 20pc poorer relative to the rest of the world in the past five years, an effect you will have noticed on holiday.
Other tools have been used to amplify the effect of low rates, such as quantitative easing (QE), the Bank of England's money printing programme, and the Treasury's Funding for Lending Scheme. The QE programme is on hold, but not unwound, and Funding for Lending is still running, artificially pushing down mortgage and savings rates.
As for the Bank Rate, the Bank's Governor, Mark Carney, has updated his "guidance" that it won't rise until unemployment drops to 7pc, which it originally forecast to happen in 2016. The Bank's quarterly Inflation Report, published on Wednesday, suggested that that level of joblessness might be reached sooner, although it was stressed that this would be a point when a rate rise would just be considered. Read on and comment » | Andrew Oxlade | Friday, November 15, 2013
Mt comment:
Savers should mobilise and come together. We should start thinking about suing the government for total and utter irresponsibility. Savers have been robbed for long enough. Savers are being hanged, drawn, and quartered to pay for the fabulous bonuses which the bankers get for doing sod all except screwing others. As I said, it's time to mobilise. Individual savers have no power at all to change things; collectively we have a chance of effecting a real change. – © Mark
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