Interest rates expected to remain 'on hold through 2013'

Sir Mervyn King, the Governor of the Bank of England, is expected to signal on Wednesday that interest rates will not rise from their record low until late 2013 at the earliest, as the UK's growth disappoints.

http://www.telegraph.co.uk/finance/economics/interestrates/9263333/Interest-rates-expected-to-remain-on-hold-through-2013.html

Interest rates could stay low for years, Capital Economics predicts

Interest rates in Britain could stay at their emergency level of 0.5% for a further three years, one of the UK's leading economic consultancies said on Wednesday.


http://www.guardian.co.uk/business/2012/mar/07/interest-rates-low-for-years

The effects of increased interest rates in UK economy

Another useful essay from Economicshelp -

http://econ.economicshelp.org/2007/05/essay-effects-of-increased-interest.html

 more advice on this - http://www.economicshelp.org/macroeconomics/toolkit.html

Video clip of Tejvan explaining the effect of a cut in interest rates -

http://www.youtube.com/watch?v=vt-soFYVoD8

Video clip of Tejvan explaining - will interest rate cuts help the economy?

http://www.youtube.com/watch?v=lOzNOOm_17o&list=UUBr2W3nb0jPSnommNbbpMAw&index=13&feature=plcp

How the MPC sets interest rates

Useful essay from economicshelp -

http://econ.economicshelp.org/2007/09/how-mpc-set-interest-rates.html

Energy costs push German inflation rate up to 2.3%

Rising energy prices pushed German inflation up to 2.3% in 2011. The inflation rate compares with 1.1% in 2010 and 0.4% in 2009. It was the highest annual figure since 2008, when inflation was 2.6%.

The figures come on the day of the European Central Bank's latest monthly interest rate decision.

Rates are expected to be left unchanged at 1.0%, following two consecutive months of cuts.

http://www.bbc.co.uk/news/business-16524837

Bank holds interest rates at 0.5%

UK interest rates have been held at their record low of 0.5% by the Bank of England's Monetary Policy Committee. Interest rates have been kept at 0.5% since March 2009.

http://www.bbc.co.uk/news/business-16529313

Q - Discuss the impact of an increase in interest rates

Useful explanation of a possible exam question from economicshelp -

 http://www.economicshelp.org/macroeconomics/toolkit.html

Business basics - interest rates

A look at how interest rates work and why -

http://www.bbc.co.uk/news/business-11238317

Where does your petrol money go? A business basics video -

http://www.bbc.co.uk/news/business-12250225

Who sets interest rates?

Useful artical about the setting of interest rates.
http://www.bbc.co.uk/news/business-12997437

Will higher interest rates reduce inflation?

There has been much speculation about when the Bank of England may increase interest rates. With CPI inflation at 4% and RPI inflation at 5.1% (highest since 1991), many feel the Bank need to act to reduce inflation and maintain low inflation expectations.
http://econ.economicshelp.org/2011/02/will-higher-interest-rates-reduce.html

Will interest rates rise due to the higher inflation figures?

Mervyn King is right to play the waiting game on interest rates. Bank of England would do its credibility no good by being panicked into a move that could seriously damage economy.
http://www.guardian.co.uk/business/2011/feb/16/mervyn-king-right-to-delay-interest-rate-increase

Mervyn King dampens prospect of rate rise

Bank of England governor Mervyn King tonight appeared to rule out an interest rate rise this year as he responded to today's shock slump in GDP in the last three months of 2010.
http://www.guardian.co.uk/business/2011/jan/25/mervyn-king-dampens-rate-rise-prospects?intcmp=239

Bank split 3 ways over interest rates

Two members of the Bank's nine-strong monetary policy committee backed an interest rate rise to combat inflation, while another voted for looser monetary policy to tackle flagging growth. The other six voted for no change.
http://www.guardian.co.uk/business/2011/jan/26/interest-rates-bank-of-england-split?intcmp=239

Rising inflation prompts call for interest rate rise

Consumer prices index shows surprise increase to 3.3%.
Andrew Sentance from the MPC says interest rates should rise and that keeping interest rates low will damage economy.

http://www.guardian.co.uk/business/2010/dec/14/inflation-prompts-call-interest-rate-rise

ECB monetary policy game

Many thanks to Ollie Hill for this link.

http://www.ecb.europa.eu/ecb/educational/html/index.en.html

Interest rates kept at record low

The Bank of England has kept interest rates at a record low of 0.5% for the 12th consecutive month. The decision was widely expected by economists, who believe that any rise in the cost of borrowing could damage the UK's fragile economic recovery.

http://news.bbc.co.uk/1/hi/business/8549531.stm

US interest rate rises results in an appreciation of the dollar

This is a good example for AS students which illustrates how a change in interest rates can affect the exchange rate. Late on Thursday the US Federal Reserve raised their discount rate - the price at which banks borrow emergency money from the Fed - from 0.5% to 0.75%.

The move was unexpected, and has given rise to plenty of speculation that they will follow this with a rise in their federal funds rate - the benchmark rate at which banks lend to each other and is used to set rates on mortgages and car loans.

That means that currency speculators have bought the dollar heavily, betting on further rate rises and pushing the exchange value of the dollar up to a nine-month high against a basket of other currencies.

http://www.tutor2u.net/blog/index.php/economics/comments/us-rate-rise-causes-hot-flows-of-money/

Interesting interest rate/inflation article

Email from Chip - 'I noticed in the news that Norway had increased interest rates. I thought it might be interesting as it seemed like a textbook example because they raised interest rates as inflation was too high and unemployment was lower than expected'.

PS. http://news.bbc.co.uk/1/hi/business/8330110.stm

Bank hints at further interest rate cuts

Expectations of another rate cut have risen after the release of minutes from the Bank of England meeting at which rates were lowered from 4.5% to 3%.
http://news.bbc.co.uk/1/hi/business/7737089.stm

Factory costs plunge fuels new rate cut hope

British factory costs fells at a record 5.6 per cent during October on plunging oil prices, raising hopes that consumer price inflation is set to tumble to below the Bank of England's target by next year.
http://business.timesonline.co.uk/tol/business/economics/article5122255.ece