News of negative interest rates in Japan had a positive impact on markets there, The central bank base rate of –0.1% means that banks are depositing money with the central bank now have to pay to do so. Not much but that’s a Rubicon crossed. Interest rates can’t fall significantly below 0% as long as cash is an option. It may be that moves to eliminating cash as a form of money may get more supporters quickly if central banks need to go further. Another global recession in 2016 or 2017 will not resolve with interest rate changes. Government options are becoming very limited, and that’s risky for us all.
It may be that moves to eliminating cash as a form of money may get more supporters quickly if central banks need to go further. Another global recession in 2016 or 2017 can not resolve with interest rate changes so Government options are becoming very limited, and that’s risky for us all. BBC Report
Just a few months ago the federal reserve doubled interest rates in the US in a move that might have been a turning point for the global trend of falling money prices, but it now looks as though it may have been premature. The dollar’s relative strength since could hurt the US domestic economy in the run-up to the election there, and that would be an interesting dynamic for the campaign to play out against. We’ll get the first flavour of the campaigns when the primaries start next week.
In a move seemingly announced on Twitter, George Osbourne decided to defer the sale of Lloyds shares this week after their price fell well below the bail out level. RBS shares, some of which were sold at £3.50 last year, also fell to around £2.50 this week. Both are a long way from the prices needed to realise the £28Bn public sector debt repayment he committed to making from these sources this year meet his targets.
That’s likely to mean more austerity, and higher taxes at a time when we expected to open up the finances a little. Tough times.