Thursday, April 10, 2008

Bank of England to leave interest rates as they are

Well, the Bank of England will no doubt actually cut its base rate, but this will have no effect on the real world where interest rates will remain unaffected.

The problem is that no one wants to lend our banks money unless they get paid well for it. That means money costs more. Unless the Bank of England is going to lend money on a serious scale (which I do not think it should) then it can't actually affect the real interest rates that much.

We are caught in an asset bubble on the way down. We will all feel a bit of pain I am afraid. I just hope it is not too much.

No comments: