Doesn't this just devalue the currency thus actually plunging us further into a recession? Also what about those with savings?
I don't really understand how the base rate cuts improve things.
In theory it should mean that existing mortgages should be lowered and that new mortgages should be cheaper. This in turn, so the idea goes, means that people will have more money to spend on goods in the high street, which will in turn stimulate manufacturing and thus avoid bankruptcies, layoffs etc.
Credit should be easier to obtain and people will thus have "money" to spend giving another boost to the High Street, manufacturing etc.
It won't of course
Why it won't work:
Mortgages are not getting cheaper nor are new mortgages becoming easier to get because the banks are not, in the main, passing the reduced rates on. They are however using them as an excuse to reduce the interest they pay on any savings people have.
Credit card companies traditionally take no notice of interest rates set by the BoE anyway and charge extortionate rates seemingly plucked out of the air. Store cards are even dearer.
Check your junk mail ~ there is no shortage of high rate, short term credit offers. These are never a good idea.
Lastly stimulating Britain's High Street will not help our manufacturing industry because we don't really have one but it will help China, Korea etc.
Snoopy's advice ~ hang on to what you've got and wait it out. What goes down will ultimately go up. Do not believe all Robert Peston and Co have to say on the subject. Such people are the root cause of many of the problems.
