News Tristan on 08 Jan 2009 02:01 pm
Media Think Bank Base Rate Cut Will Have No Effect On Economy
I watched the news this lunchtime, which was all about the Bank of England base rate cut, and how it is the lowest interest rate since the Bank of England was founded in 1694. This is therefore an unprecedented period in the history of the UK economy.
Most of the focus during the bulletins about the base rate cut seemed to focus on the negatives, which seem to be that the banks are still not lending to each other, they’re not attracting any foreign investment funds because the returns are too low now thanks to the cuts in the base rate, and the perennial moan about the banks not lending to businesses and consumers.
Typical of the media not to focus on any of the positive news that comes from this announcement today, such as the fact that around half of UK properties that are mortgaged are on tracker rates. As such this vast number of homeowners and landlords will find themselves with more disposable income, which is good news for the UK economy (assuming that some of that money trickles back into the economy in the form of increased consumer spending).
When you consider that only as recently as November 2007 the base rate was up at 5.75% (BOE lowered to 5.5% in December 2007), means that in just fourteen months, we have seen a 4.25% reduction in the base rate, or in terms of the average UK mortgage of £150,000, a saving of £531.25 a month in interest. Surely this would have been a far more positive spin on todays Bank of England announcement, given the recession and numerous stories of businesses entering administration and laying off staff.
on 08 Jan 2009 at 2:13 pm 1.John said …
Bad news and misery sells…
Good news, doesn’t :(
on 08 Jan 2009 at 3:45 pm 2.Rob Lewis said …
Great point well made Tristan.
on 08 Jan 2009 at 4:23 pm 3.Tristan said …
Cheers Guys
This however, was the BBC, so given the unique way its funded - in essence a broadcasting tax - they are a non-commercial organisation, and as such should remain rather more impartial, and present a more “balanced view” that takes into account both sides of the story.
on 08 Jan 2009 at 4:37 pm 4.Rob Lewis said …
Damn that man Peston!
on 08 Jan 2009 at 10:00 pm 5.A Positive View Of Today’s Interest Rate Cut / Money Watch said …
[...] Tristan at Find Financial Freedom points out, a lot of media analysis of today’s interest rate cut to 1.5% has been negative, focusing on [...]