This is a massive factor in the economy today. Quantitative easing, exchange rates, the balance of payments, asset protection schemes, consumption stimulation, overseas earnings (reported in USD or GBP), opportunity cost of funds (why save at 1% when you can throw it all at a manipulated market?), loan defaults, property prices. These are SOME of the issues of the day that absolutely hinge on the interest rate policies of the BoE and other central banks. This weekend I read how the UK must raise the interest rate. Just hours later the wire lit up with every news agency fanfaring the Centre for Economics and Business Research, or CEBR (never heard of them) saying that "the key rate will remain at its current 0.5% level until 2011 and not reach 2% until 2014". Someone really doesn't want us to save. We should drink ourselves out of the hangover!
I am surprised that no-one has felt like replying to this opener despite a fair few views. I know that most of the LSE users are focused on tips and quick bucks but long-term forecasting, historical references or policy debating may interest a few more thoughtful souls. Paranoia Blue, where are you? I also believe that seeing the big picture, understanding overall trends is more important, profitable and impressive than blinkered day-tarding (spelling deliberate).
I thought I might tentatively revive this thread as some of the people on 'Spreadbetting' board seem to be getting fired up about the significance of low interest rates in the expanding equity bubble. We have seen that all it takes is a hint that interest rates will rise next year for the indices to tumble.
“In his speech on the economy, President Obama said this, we have to continue to spend our way out of the recession. Spending our way out of the recession? Isn’t at the like trying to drink your way out of alcoholism?”
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