Thursday, October 15, 2020

UK Going Negative?

 There's talk of the UK going negative on it's interest rates

And it's been talked up for a few months now.

Will it be the start of a trend?

August 2020

The Bank of England has voted to keep interest rates on hold at 0.1%, but the continuing Covid-19 pandemic makes the outlook for the economy very uncertain and the Bank is considering the pros and cons of taking the UK into negative interest rate territory for the first time.

Earlier today 

The Bank of England has told banks to be ready and bosses say that they can handle Britain’s first ever sub-zero Bank Rate – or base rate as it’s more commonly known.

This would seem a clear indication of the direction of travel, but I suspect the jury may still be out on the Monetary Policy Committee as to whether there is even any point in negative rates. 

If base rate went below 0 per cent then savings rates could follow – meaning that rather than being rewarded by the bank for stashing your money in one of its savings accounts, you would instead be charged for the privilege.

In theory, this discourages over-saving. Those with larger pots of cash than they need would put it to a more economically productive use than parking it in a savings account, as the negative interest would erode its value.......

 

 

2 comments:

  1. ECB has already negative base rate for several weeks now.

    ReplyDelete
    Replies
    1. Hi gallier2:
      I was unaware of that. Thanks
      btw: the situation in France?
      Macron's martial law?

      any thoughts?

      Delete

TROLLS &SPAM WILL BE DELETED WITHOUT HESITATION
KEEP IT RELEVANT. NO PERSONAL ATTACKS