Commonsense dictates that cutting central bank base rates and/or giving the banks loads of easy money will not* reduce market interest rates paid by mortgage borrowers and businesses.
Clear evidence of this is in today's Times, h/t Titanic Captain.
Rather bizarrely, the sub-heading to the article is "Millions to benefit from variable rate cuts".
* It's like pushing a piece of string; the reverse operation - raising base rates and/or reducing money supply does increase (nominal) interest rates. That's pulling a piece of string.
Thursday, 9 October 2008
"Lenders pull plug on top mortgage deals"
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1 comments:
I like the analogy!
PS How does a cut in interest rates encourage savers to keep their money in bank accounts!?!
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