The last thing we need is to punish savers EVEN further and encourage reckless bank lending and yet, unbelievably, that is exactly what the financial “experts” at the Bank of England seem to be contemplating.
Negative interest rates should be considered as an option to encourage banks to lend to small and medium-sized firms, the Bank of England’s deputy governor for financial stability said today.
Paul Tucker said the dramatic move had been discussed at this month’s rate-setting meeting as an option to help fuel economic growth. Such a move would spell catastrophe for cash-strapped savers, who have already been crippled by rock bottom rates since the Bank of England dramatically cut the base rate to its record low of 0.5 per cent in March 2009.
Lending is based on calculated risk, not largesse. I would encourage banks to be careful to whom they lend. Saving is predicated long term investment and denying oneself short term benefit. At a stroke, Tucker seeks to increase risk taking and punish prudence. Remarkable stupidity, even by Bank of England standards.