… well according to the Bank of England and the Fed it’s to cut interest rates to keep people spending and borrowing. Whether this policy will work in the short to medium term is debatable, but in the long-term people will have to cut back their levels of borrowing as its simply not sustainable.
The rate cuts are bad news for savers as interest income will be cut and with inflation continuing to rise, as a result of higher food and energy prices, savers will be feeling a lot worse off this year.
Wow… what a week it has been for the markets. The term ‘Credit Crisis’ can now takes its place amongst the ‘Dot.Com bubble’, the ‘1987 crash’ and ‘Black Thursday’ as it will be a long time before the markets forget this week (or indeed the events that may still be to come).
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Two weeks after I wrote an article here about Student Loans the Metro has a front page article titled “Double-dealing on student loans” detailing why graduates are furious at the discrepancy between the CPI and RPI rates of inflation which leave them worse off.
The only thing the article really adds to the debate is a comment from the Government “We think it’s important to use the same measure across the years” - something which I’ll be sure to remember when they try and justify increased council tax bills in the coming months!
The Bank of England shocked everyone today by increasing the base rate to a 5 year high of 5.25 per cent. That now means a millionaire would earn an extra £2500 per year in interest if their money was invested at the base rate bring their annual return to £52,500. (more…)
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