Inflation rise in UK

Story link: Inflation rise in UK

Inflation is on its way up in the UK, reaching 1.5% for October:

UK inflation rises to 1.5% in October

The Office for National Statistics has today announced that Consumer Price Inflation (CPI) rose for the first time in eight months to 1.5% in October from a 5-year low of 1.1% in September.

The rise was not unexpected after a sharp fall in transport costs last year was not repeated this year and because fuel prices had seen record falls this time last year.

The real question everyone will be asking is whether this is simply a technical rise, which will continue a few more months before falling back again – as the Bank of England believes – or whether this is a sign of inflation about to run out of control.

There are two main camps for the latter – one thinks we face deflation in the near term, while the other thinks we face hyper-inflation in the medium term. Both camps are not, however exclusive.

That means you can be sure inflation is going to be watched even more closely than ever, for warning signs of one or the other scenario playing out.

Lowest Euro rate ever

Story link: Lowest Euro rate ever

The European Central Bank originally started setting rates back in January 1999 and since then the rates have never been lower than the ones we see today, which means they are truly concerned about the state of the economy and so they should be.

Lowest Euro rate ever

The European Central Bank (ECB) has cut its key interest rate to 1.5% from 2.0%, the lowest since it started setting euro rates in January 1999.
It followed a cut in UK rates by the Bank of England. US and Japanese rates are, in effect, already at zero.

How low can they go!?

Story link: How low can they go!?

I have to say, it has been quite a while since I last checked up on interest rate developments and the possibilities of them dropping, so I found it interesting that the Bank of England has finally bitten the bullet and dropped them to 0.5%. Will they hit 0%?

How low can they go!?

The Bank of England is expected to cut interest rates to a fresh all-time low and start increasing the money supply in an attempt to revive the economy.
Most analysts believe the Bank will cut rates to 0.5% from 1%. An announcement is due at 1200 GMT.

How much can you save?

Story link: How much can you save?

There are literally hundreds of ways to save money and I’m not talking about sticking it in a high street account and earning 0-1% interest either!
Many homeowners that got on the property ladder before the crunch, while they may be losing value on their properties they are paying stupidly low mortgages, so really it has been offset and works out for the better.

How much can you save?

This is equivalent to £9,000 a year, or even more when interest savings are taken into account, which will help home owners maintain their equity as house prices fall.
The average interest rate on a tracker mortgage on July 1, 2007 was 5.98pc (0.48 of a percentage point above base rate, which then stood at 5.5pc), according to moneyfacts.co.uk, which collects financial information. A borrower whose entire mortgage repayment consisted of interest would therefore have been paying £996.67 a month.

Interest rates to rise

Story link: Interest rates to rise

While rates continue to fall, there are already people suggesting that rates will begin to rise, which they mostly probably will do.

The economy depends on the likes of interest rates to create some kind of stability

Interest rates to rise

Official UK interest rates will need to rise before any economic recovery is felt on the ground to stave off the risks of an inflationary surge, former Bank of England Deputy Governor John Gieve said.

“We’ve got to hold on to the fact that inflation will be kept low,” Gieve said in an interview with the Sunday Times.

Drastic measures needed in the banking sector

Story link: Drastic measures needed in the banking sector

The Bank of England has taken some drastic measures since October to try and stabilise the UK economy, as well as saving the banking sector.
The problem is, the various interest rate drops and cash injections into bank havn’t made any direct gains for the UK, so they may have to ease monetary policy in the short term to regain stabilisation.

Drastic measures needed in the banking sector

The Bank of England will probably have to ease monetary policy further to get the British economy growing again and inflation back up to target, possibly by buying gilts to boost the money supply, Governor Mervyn King said on Wednesday.
Interest rates did not have to fall to zero first, he said, signalling that the Bank’s Monetary Policy Committee could vote to start quantitative easing — where a central bank raises the monetary base to support the economy — as soon as next month.