It's not so much what they are saying - they have demonstrably embarked on a process of printing as much money as they think they can get away with combined with suppressing interest rates.
Therefore, you have to consider this when planning financially. Of course, there is always the chance that market forces will make them abandon this path and force interest rate hikes but I can't see the money printing stopping no matter what happens, I think they are now past the point of no return on that and have to keep printing to keep the plates spinning.
It is quite easy to see where they are coming from....
http://www.guardian.co.uk/business/2010/sep/28/spend-save-economy-bank-england-chiefQuote:
Bank of England deputy Charlie Bean says spend, spend to save economy
Interest rates are being held down to discourage savers, financial chief admits
Quote:
The record low rates help mortgage-holders, particularly on tracker deals, but make life difficult for people who rely on income from savings, many of whom are pensioners. Official statistics suggest borrowers have gained by £26bn, while savers have lost £18bn in reduced interest.
"What we're trying to do by our policy is encourage more spending," Bean told Channel 4 News. "Ideally we'd like to see that in the form of more business spending, but part of the mechanism that might encourage that is having more household spending; so in the short term we want to see households not saving more but spending more."
The deputy governor said: "I think it needs to be said that savers shouldn't necessarily expect to be able to live just off their income in times when interest rates are low. It may make sense for them to eat into their capital a bit."
Many of those facing a squeeze because of lower rates were "older households [which] have actually benefited from the fact they've seen capital gains on their houses. "It's very much swings and roundabouts. At the current juncture, savers might be suffering as a result of bank rate being at low levels, but there will be times in the future (as there have been times in the past) when they'll be doing very well out of the fact interest rates are at a relatively high level. I think that's something that savers should bear in mind.
So there you have it straight from the horses mouth. Of course the Governer and no doubt the Deputy Governer of the BOE need not worry about their old age given the gilt edged inflation proof pensions they are on. Almost everyone else will be required to purchase an annuity when they retire from their pension funds. Printing is debasing the value of these annuities every day and quite substantially.
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