Today the Bank Of England cut its interest rate by 1.5% creating the surprise into the financial market! Two weeks ago, we knew that the BOE wanted to realize an other cut but at this time they were announcing 0.50%. Then, two or three days ago, a 1% cut was expected and it is finally 1.5% which has been cut reaching a 3% interest rate. According to the financial times, the UK rates fell today to a 53-year low!
Will the election of Obama on Tuesday 4th November improve the confidence of the US borrowers and are we going to see an improvement in the financial market? I think that it is still too soon to know, this election will certainly help the population to recover the hope they lost lately!
This big cut from the Bank Of England is the beginning of several others in the few next weeks! Good news ? Bad News ? By cutting the interest rates they will effectively stimulate borrowing which is a good news but isn't it a bad news to see an other cut? It is a sign that the market is still not recovering and is still suffering so what can we think about that ?!
I personnally think that the next months will be very interesting to follow, a lot of things will happen, the history is currently being written!
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5 comments:
You are touching very important point in you r article but if the interest cuts are not effective and efficient, what will do the Bank of England and ECB? This is also a huge question, what is your opinion about that?
Yes," the history is currently being written" and I am afraid for the future. May be this cut will be only a drop in this ocean of disaster!
Could your generation find the key to resolve this crisis.
I don't think the improvement will be so soon. The expectations and the faith in Obama are too demanding.
Cut interest rates must be made to motivate potential buyers/ investors, so it's a good news for all of us.
But, but, it's an ordinary measure, even though the cut is important, because we are now facing a huge and complex financial crisis.
In western european countries like Ireland, England, Spain the current crisis is also due e.g. to the real estate industry specific standstill.What will be the measures taken by the BOE and others european banks at this respect?
The problem is very serious because of the house prices shall plummnet around 25% and then what will happen with the mortgages of all these borrowers? This is a big issue that the financial system will have to solve.
In any case, it will take, in my opinion, a long time to overcome the current situation created by international speculation.
Gosh bless us!
To start I want to thank you all for your comments on my blog, I appreciate and encourage you to keep reading :p
Julien, I think one of the biggest question today is the one you asked me :)
Are the cut in interest rates will be efficient ? Mervyn Allister King announced that the Bank of England was ready to cut as low as needed! I think they didn't find a better solution so far and bet everything on this cutting strategy. So one thing's sure, they hardly want to make this work ;)
Geneviève: Our generation will surely find the key to resolve this crisis, but the true question would be, will our generation find the key to avoid another similar financial crisis ?
Brigitte: I totally agree with your point and I think that people believe that Obama will end this financial crisis quickly. However, the new president will really be able to act in january and until then the recession has the time to go deeper!
Vincent: I agree that the cut in interest rates is an ordinary measure and as you said the financial system must find better solutions to face the current issues!
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