Quote:
Originally Posted by Finance News
In a speech yesterday, Bank of England Deputy Governor, Rachel Lomax, has warned of slowing growth and rapidly rising inflation in a sign that interest rates will come down slowly. The global economy looks bleak said Ms Lomax, there have been financial and banking crises before, but not on the present global scale.
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What political rhetoric this is. Inflation is increasing so interest rates have to come down slowly. Wrong! Inflation is rising so interest rates should be rising. The cut in the Fed rate will allow banks to delay the inevitable.
Nominal interest rates = Real interest rates + inflation
The interest rate we are concerned about is the mortgage rate, the govt controlled US Fed rate is only important to banks. Mortgage rates wont come down.
Further interest rate cut not expected until mid-2008
