Bank rate 'will stay low for four years'

[AtW]

MERVYN KING believes interest rates in Britain will stay lower for longer than the markets expect, according to private conversations he had with a senior American economist.

David Hale told Australian television last week that at a private meeting the Bank of England governor had told him that the tax increases and spending cuts that would be needed would be so unpopular as to keep the party that introduced them "out of power for a whole generation".

After the meeting with King, on March 11, Hale attended a drinks party and a breakfast meeting the following morning. Both gatherings were off the record but, according to people present, he also said that King believed that to compensate for the fiscal pain ahead, the Bank would need to keep interest rates extremely low.

Bank rate is at a record low of 0.5%. "The impression was that rates would stay low for the next four years," said one of those present. The Bank has confirmed that King and Hale met but refused to say what they discussed.

More from the source: Bank rate 'will stay low for four years' - Times Online

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For fooks sake, who made that guy the Gov of BoE?

[HairyArsedBloke]

In the meantime, three members of the "shadow" monetary policy committee (MPC), which meets under the auspices of the Institute of Economic Affairs, are less relaxed about the outlook and favour an immediate rise in Bank rate.

I agree. But I don't think it will happen.

[MrMark]

the Bank of England governor had told him that the tax increases and spending cuts that would be needed would be so unpopular as to keep the party that introduced them "out of power for a whole generation".

I think a lot of people are in for a huge surprise. A lot of the press are sneering about "PIGS" countries and their debts, but the UK's in a really bad way too. For example the state debt compared to GDP in Spain is 59%, in the UK it's 71.5%. The budget deficit in Spain is 9.6%, in UK it's 11.6%.

Where are the big cuts going to come? Up to now they've all waffled about efficiency savings and "mansion taxes". I'm afraid none of the political parties have any idea of the scale of cuts (and/or tax rises) that will be needed.

[threaded]

To be fair, many of them don't know where they live, or even if they have a mortgage or paid it off.

Stuff way more complex like a countries economy is far far beyond their understanding.

[AtW]

I'm afraid none of the political parties have any idea of the scale of cuts (and/or tax rises) that will be needed.

They all know (with possible exception of the delusional Brown) but none of them is brave enough to say the truth...

[HairyArsedBloke]

They all know (with possible exception of the delusional Brown) but none of them is brave enough to say the truth...

Aye.

If anyone wants a clue then look at where the money gets spent. The largest draw on spending is where the majority of the cuts will inevitably be made. I predict a riot.

[AtW]

I predict a riot.

Only if football clubs are closed down ...

[shaunbhoy]

For fooks sake, who made that guy the Gov of BoE?

Why do you even care about Interest rates? You are a cash rich renter surely, and should be investing any money you have into SKA to produce more jobs for our skilled workforce.

[AtW]

investing any money you have into SKA to produce more jobs for our skilled workforce.

Interviewing some a few candidates (industry placement year for students) in the next couple of weeks.

[Drewster]

Interviewing some a few candidates (Dumb & Naive Numpties that know no better and I can get for pennies) in the next couple of weeks.

ftfy