BoE – Future Guidance Mark Carney announces super low interest rates for the next three years

Mark Carney the new Bank of England Chief breaks with tradition and announces that record low interest rates are to last another three years. Today Mark Carney the Bank of England Chief gave the clearest message yet that interest rates should remain a record low 0.5% for the foreseeable future and at least for the next three years. ‘Forward Guidance’ as this form of announcement is now described, is subject to the caveat that it will be reviewed should the be a rise in measured inflation above 2.7% or unemployment falls below 7% What does this mean for businesses and households across the country? Whilst this is may not seem good news for savers with cash on deposit, it’s great news for those in business or those looking to start a business. But why? Firstly it means that  the biggest personal outgoing for most people i.e. their mortgage interest, will  remain low. Secondly, businesses will feel more inclined to invest with the knowledge that their interest charges on loans will be unlikely to rise in the medium term. As explained below this will also create a more benign climate for business lending. The main winners of course are the banks who are having the time of their lives racking up massive profits by arbitraging the margin between their interest buy and sell rates. This, however, should speed up their ability to shore up balance sheets and comply with the international banking Basel Committee capital reserve requirements which should then lead to better conditions for business lending and investment. the BBC reports further on this story  click here to view  

Exeid.com gives this move the thumbs up. But what do you think? We’d love to hear your comments.  Please fill in the comments box below or email your comments we and we’ll publish them if you happy for us to do so. If you feel ready to start a business or you are looking to expand your business and need more space, we’d be delighted to help. Call us on 0115 824 1444 or send and  email us by clicking here