Wednesday 23 March 2011

Bank of England - Interest Rates


Hi everyone,

Continuing on from yesterdays post of the UK inflation figures, the Bank of England has decided to keep interest rates at its historic low of 0.5%.

The policymakers voted to keep the rates the same to keep in line with their medium term goals.


--

Thanks for the comments yesterday, I'll explain some of these terms:

The CPI (Consumer Price index) and RPI (Retail Price Index) is how the Government (UK in this sense) measures inflation; they measure the price of household goods and compare them year on year.

Raising the Interest rates means there will be a higher cost in borrowing money, yet the value of the currency will increase, increasing the incentive to save (a savings account will have a higher interest rate).

Interest rates were cut in many countries (USA, UK e.g.) to stimulate economic growth because of the banking crisis.


Regards, Sam

17 comments:

  1. thanks for the info. you should continue to give little lectures as you post. :D

    ReplyDelete
  2. yes, keep incentive to borrow and go into debt!

    on another note, catch the Nikkei on the rebound if you aren't too poor like me )

    ReplyDelete
  3. I wonder how big are the interest rates elsewhere in Europe?

    ReplyDelete
  4. I also noticed portugal is on the verge of collapse and will need international rescue soon

    ReplyDelete
  5. thanks for explaining those terms, I'm close to understand your posts now

    ReplyDelete
  6. It's like I'm in Econ 101 after reading your posts again :)

    ReplyDelete
  7. Insightful and informative. Thanks for sharing.

    ReplyDelete
  8. wow i might just move to England to buy my first house with rates like that!

    ReplyDelete
  9. 0.5%?! It's quite difference since other years!

    ReplyDelete
  10. Awesome! :) Thanks for sharing

    ReplyDelete
  11. thanks Sam! you this really helps :) we use different therms for those values!

    ReplyDelete