Bank of England

I see that nothing has changed since Mark Carney left the Bank of England. Still jittery and scared to commit. EVERYTHING that the B. O. E. says or does causes the pound to fall against all major currencies.

Yes, no real excuse to not raise interest, which would have pushed the pound up, but instead left interest rates as they are causing the pound to plummet.
The BOE target for inflation is 2%, its currently at 3.5% and the BOE itself said it expects it to go as high as 5%.
Its own policy suggests if inflation is above 2% then interest rates should be increased, but no, despite inflation at 3.5% and rising, they instead left rates and further damaged the value of the pound.

Leaving interest rates unchanged is not all bad news....it kinda depends from which direction you're viewing it.

* It's certainly good news for those in the UK with variable rate mortgages and other loans.

A weaker pound is also not all bad news if:

* You're in Spain and intend visiting or holidaying in the UK.
* You're selling property in Europe and moving back to the UK.

Just when exchange rates start to rise, and our pensions start to look better, some in the U.K. government opens their mouth and down they go again. I have lived abroad for near 20 years and it happens every time. As for interest rates, we are the generation that saved, a nice little nest egg in a premium savings account, a few small investments, a but if interest and we should be ok for retirement instead what have we got zilch.

There are many factors the BOE has to take into consideration when reviewing interest rates. One is the fact that in 2009 the interest rates were lowered to stimulate growth. Many people took advantage of cheap money and mortgaged themselves up to the hilt on houses they otherwise could not have afforded, home extensions and maybe even new cars and holidays.
I read recently that a 1% interest rate increase might result in many people unable to pay their mortgages etc and perhaps having to hand their keys back. We might say ‘serves them right, they didn’t need to take the money’. But this could trigger a recession and turn the attention onto the government. Certainly, a recession wouldn’t be good for anybody.

By the way, we purchased our first house in 1970 on a GLC mortgage of 8 and five eight’s %.
We bought our second house in 1979 and had to take out a mortgage with a Building Society for 50% of the loan at 15% and 50% with an insurance company at 18%.
We bought our third and current house at 11 and a quarter % (floating rate) in 1988 with an endowment policy. By 2004 we were clear of the debt.

So I know all about high interest rates! Probably most of us have? And that is why we live in a fairly modest 3 bedroom detached house and have never been tempted to borrow money again.

I wonder what would happen if interest rates went back to those high levels again?

Ginger wrote:Just when exchange rates start to rise, and our pensions start to look better, some in the U.K. government opens their mouth and down they go again. I have lived abroad for near 20 years and it happens every time. As for interest rates, we are the generation that saved, a nice little nest egg in a premium savings account, a few small investments, a but if interest and we should be ok for retirement instead what have we got zilch.

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The Government didn't make this decision. It was the BOE committee.

MichaelC wrote:Yes, no real excuse to not raise interest, which would have pushed the pound up, but instead left interest rates as they are causing the pound to plummet.
The BOE target for inflation is 2%, its currently at 3.5% and the BOE itself said it expects it to go as high as 5%.
Its own policy suggests if inflation is above 2% then interest rates should be increased, but no, despite inflation at 3.5% and rising, they instead left rates and further damaged the value of the pound.

The pound has not plummeted, it rose from the mid 1.16’s to the mid 1.18’s as the market anticipated a rate rise. The rise did not come so the rate returned to it’s prior level.
The BoE decided against the rate rise because they are awaiting data with regards to the effects of the ending of furlough, which is not available yet.

Ginger wrote:Just when exchange rates start to rise, and our pensions start to look better, some in the U.K. government opens their mouth and down they go again. I have lived abroad for near 20 years and it happens every time. As for interest rates, we are the generation that saved, a nice little nest egg in a premium savings account, a few small investments, a but if interest and we should be ok for retirement instead what have we got zilch.

Every generation has its own challenges.

I'm affected by the change to women's pension age, having to wait 6 years from my anticipated retirement date. I'm struggling financially as a result, but the wait is nearly over.

I didn't earn enough to save after I was widowed at 37, but always paid into works pensions. These allowed me to retire "early" i.e. before 66!

"Your generation" wasn't affected by this change, I guess.

The grass isn't always greener on the other side.