Quantitative easing aims to stimulate the economy and reduce gilt yields. A consequence of this is that lower bond yields lead to lower income for savers. This particularly affects pensioners who rely on income from savings to provide for their retirement. Since QE was implemented in March 2009, the income paid by pension annuities has …
Danny Blanchflower, a former member of the Bank of England, writes a critical piece on the Bank of England’s forecasting record in the Independent. “The second chart gives cause for concern because for the umpteenth time the MPC is forecasting rapid recovery, which is extremely unlikely to happen, and it seems that little has been …
Readers Question: Do the US have to depend on others to buy their bonds? The US doesn’t have to rely on other countries to buy their bonds. If there is sufficient domestic demand for buying US bonds, there is no need to rely on foreign investors. However, at the moment, about 30% of US bonds …
Readers Question: How is it possible for countries with massive debt to have a strong currency, e.g Japan and the US? Sometimes countries can have large debts that are sustainable. In the case of Japan and the US, the general consensus is that there is a very low risk of default. US debt is very …
An Overview of the Indian economy in 2012 and its prospects for the future. (Depressed by events in Europe, a look at an economy with a very different economic outlook). Summary In the past few years, the Indian economy has been growing rapidly – (e.g. 8.5%2010-11). However, this growth has led to an increase in …
Despite the weakness of the UK economy, the Pound is forecast to rise against the Euro, due to the ongoing uncertainty surrounding the debt crisis in the Eurozone. With Greece and other countries at risk of default, and even facing the prospect of a Euro break up, the Pound Sterling looks relatively attractive – despite …
Since 2007, the UK has experienced a variety of economic shocks which have caused a prolonged period of economic stagnation, high unemployment and uncertainty. In 2011, the economic recovery proved much weaker than expected, yet inflation was stubbornly high. In 2012, fundamental weaknesses are likely to keep the UK economy depressed with high unemployment and …
Gross interest rate. This is the total interest payable before any deductions such as tax and charges. For example, the gross interest rate on a savings account maybe 4.4% Net Interest Rate. This is the total interest payable after any deductions. For example in the UK, the net interest rate will be the gross interest …