When will the money market returns to normal?
Over the last two years we have seen worldwide money markets struggling to provide funding to the financial sector purely and simply because of a fear of default. Ultimately this has led to a significant increase in the cost of money around the world which has then impacted upon areas such as mortgages, loans, credit cards and consumer finance in general. Even though UK base rates remain at 0.5%, and appear unlikely to move in the foreseeable future, this rate is not reflected in the money markets.
We will only see money market rates return to their traditional relationship with base rates as and when the fear of default and the growing concern about the UK economy recedes. Until this time there is every chance we could see situations such as the Dubai debt crisis have an impact upon short-term money market rates, which will then have an impact upon both the consumer finance market and the corporate finance market.
So far the UK government's quantitative easing program is assisting with finance in the UK but this particular initiative will at some stage, whether this is early 2010 late 2010, be taken away from the market. What will happen after that is anybody's guess!
Share this..
Related stories
Game Group issues disappointing trading statement
Game Group today issued a disappointing trading statement and a warning on future probability for the company. Sales in the company's UK and Ireland stores fell by 17.5% over December into early January even though there is "a sizeable installed base of hardware". Only a few months ago the company appeared to be more upbeat on the prospects for the festive period but these hopes have evaporated ov...
Read MoreConstruction sector concerned about the future
Morgan Sindall, a prominent operator in the UK construction industry, has today issued a statement suggesting that government cuts in construction could be as much as 35% to 40%. Despite the fact we have seen no concrete guidance from the UK government the company believes that school building, road building and housing developments will be cut back drastically over the next few months. While many...
Read MoreRoyal Bank of Scotland refuses to pass on latest base rate cut
The Royal Bank of Scotland, which is now majority owned by the government, has refused to pass on the full savings of the Bank of England's half percent base rate cut this week. While they have vowed to pass on half of the interest rate reduction to their standard mortgage customers this has caused serious debate within financial circles with HSBC, Lloyds TSB and Nationwide confirming that the ful...
Read MorePolice In Bid To End Pub Happy Hour
News that the British Beer and Pub Association has been forced to rip up what was hailed as a revolutionary voluntary scheme of practice has provoked an angry attack from police forces throughout the UK. The code was introduced to pubs and clubs around the UK only three years ago in a move to curb reckless practices and offers which often left many people very much worse for wear.
...
Loan shark charged 2500% interest on £500 loan
Robert Reynolds, a loan shark from the North East of England, today escaped jail despite being found guilty of charging interest rates of up to 2500% on a customer who lent just £500. The husband and wife in question borrowed just £500 from Reynolds and were forced to pay back nearly £90,000 over a seven-year period.
Due to missed payments the interest rate charged on the loan pe...