Forward Guidance from the Bank of England

I think this is a brilliant idea, providing inflation doesn't go sky high. In that event those who 'took the risk' today will be in even deeper debt and probably have to shut up shop as a result.

Poor old 'prudent' pensioners won't get any (or very little) interest on their money.

Boo, hoo I am in tears for them! Hey, I'm one of them, but the difference is I don't have a savings account where I rely on interest to live in retirement.

Any comment from the members?

Fill us in on what they want to do Ron.

I read the other day...What did America give to the world?

What did England give to the world?....America!

Read about what he is doing here Shirley http://www.bbc.co.uk/news/business-23595418

Sounds like a very good idea to me

Ron, there use to be an time over here with bank interest rates were completely tax deductible....then they stop it and things spiraled oout of hand. We can still deduct our home mortgage interest rates, which was initially set up to counterbalance our income and off set what would be an intial tax deduction the same as one more dependent in the family in our retirement years...but they changed that also..now we get charged an interest based on the prime lending rate....so we get no where basically..we owe long term bills because we have no way to pay them off for the constant chaning interest rates that back the intial purchases. We get an ton of credit card applications every month..with lower interest fee's ..now even "fixred" rates...but then after say one year...it goes to an even higher prime rate. When you owe in big sums of money...that doesn't help you pay off the loan.It is an fraduant thinking as is.... to buy more on your credit card if it allows you extra "rewards"....It is an incentive to get even further in debt over all. The original system worked better...the more you owed the more you got back on your taxes...and it was only good fro property bank loans..not everyday personal loans...whicih are generally short term anyway. Many of those type of perchases can be easier controlled then is an high property loan for an house for instance. Where people have gone wrong is the CEO's that came in and thought they had to make an name for themselves by changing the rules that worked.  this fella says to keep down interest rates, but it won't stop the buying.......it will encourage it and get people even higher in debt once again. What difference does it make if you owe extremely high amounts what the interest rate is unless it can be deducted in some way or applied to the loan each year to help pay it off. ...really the anser would be no interest for an period of time that the loan is paid off at least 50 per cent. that would reduce the monthly ot flow in interest rates to where an person could take the difference an pay of the rest of the loan...but then they should set the limit of loan borrowing to not more then $100,000 also. They have already done that to my hubby on our house. That means that they will not let him get in debt beyond what the house is reasonably worth. House is worth twice that much. I know my banker first hand, and their staff...and have for 40 years. If anything happens to my hubby it will be him managing my accounts. All our debts are backed by having anything we owe paid off in case of hubby's death and the same goes for my debts. But they have to be honeored or having the insurance taken out of our monthly statements to cover our debts is absolutely worthless. I have heard many people say that in these natural dissasters....that the insurance compies are coming through on their fee's on the insurance. If they did..people might not have anything but these still don't owe money for an house washed out to sea exactly..and no longer there. Right there is where FEMA is suppose to step in, but I can tell you from the flooding out here that the people helped themselves better then did Fema. About the only thing they got from Fema was an couple years down the line an new school built on higher ground. If anything came oout of the flood it was that your friends are indeed your best friends...they can house you temporarily...help you repair and build your house again if need be. The fact that when the trees were blown down they were given massive amounts of downed firewood to burn over winter so theywould have no utitly bills helped them greatly. They didn't have to pay for the wood either and could go an get it as they needed it. Even Walmart(grocery store) knows when the people were without jobs to where the people had no money to buy groceries, to open their doors and give it away and write if off as an "lost" in their business... to stay in business. It kept the area from becoming deserted or with homeless people....and the crime rate down. A lady later on this area started growing her own garden on her huge property and giving people tickets to take so much free fresh food every month also. It was wildly popular idea. though I feel that an person shouldn' thave to lose everything they own for real help to suvive these days either.  Even the pope knows to tell his people to be more realistic and drive good but used cars in times of economic problems...you don't need an high price auto to get you from point A to point B every day.Just an well running automobile.... that is the challenge. Until things turn around, it is cutting back and helping if you have the opportunity to do so...to get things back to normal again and looking to forward progress once again. AS Dave Ramsey says..it's rice and beans time until the debts are paid off and then toot your whistle...and party an bit. Most people can't pay off their debts, because the they are dealing with lower incomes these days then what was in the past. 90 per cent of all jobs now are part time.80 per cent of the average so called American is now on the edge of the poverty line...because they were the fitst people made to cut back, when they were not the ones running  up the debts...they are in debts now, trying to live daily though on money they don't have. Nope cards with an one year low interest rate aren' t going to get people in any better situation unless they owe less then $100...and it's not going to help for one year to pay off debt that amounts to thousands of dollars...mostly from high interest rates in the past either. they need an big daddy like what was done for the airline and bankers in the past.... and have their debts forgiven.

Many small businesses say that the banks will not lend to them at all. Possibly you are fortunate in having a helpful bank manager who is prepared to lend to you at a rate which is not extortionate. I hear of many small businesses which have had the plug pulled on them by the bank.

PS My original post was related to the cost of consumer credit. This is ridiculously expensive compared with base rate.  And if consumers can't afford to buy on credit, what will the businesses do, now that everyone has spent their savings?

Great post that Shirley and plenty to think about for sure.

You mention 'no interest'. I also believe that would work as it did in Hong Kong but will anybody be brave enough to do it?