Interest Rates Rise in the UK Essay Example | Topics and Well Written Essays - 2250 words

Interest Rates Rise in the UK - Es ordain instanceThese effects caused by a low inflation, low interest, but highly tax economy are the outcomes that are a current and continuing to thwart economic competitiveness and equilibrium across the UK manufacturing base.This engagement therefore seeks to submit some of the reasons for the causes and effect of increase in interest rates that are now providing causal effects across the economy. In particular the economy of the USA, that has been a focus of concern across financial sector industries in the UK.Commenting on the effect that world interest rates have on domestic interest rates, Mr King said that We look at the balance in the midst of demand and supply, we take ourselves what goes into that balance and there is no doubt that what is happening in the rest of the world is a make input into that assessment. However, the way in which overseas interest rate changes affect our judgement is solely as an input into that judgement .all central banks are very clearly focused on meeting their profess price stability objectives. Of course they take the rest of the world into account, but they do not say Oh gosh, Jean-Claude has put up interest rates, perhaps we ought to keep up with him it is not like that (House of Lords 2006 p.10).Therefore, the economics of equilibrium are a force that has to be recounted in that the elasticity of the economy is a crucial smell of financial housekeeping in all World economies and despite the fact an economy must predominately consider its own fiscal policies, rather than being affected by other economic decisions. The problematic field of asset is also a crucial factor when considering the level of impact on an economy, in the aforementioned(prenominal) report, the select committee discussed the recent developments in asset management in the USA which has infected the comparative economies that have relied on in particular, citing Mr Ben Bernanke, Chairman of the US Fed. stated thatPart of the problem concerning the relation between money egress and inflation is that for many households money holdings are an asset, as they are a skeleton of saving as well as a source of potential purchasing power. The down-turn in production line markets in 2000 may have caused a flight into money and so begun the growth in M4. With the growth of non-bank financial intermediaries, and the increased use of mortgage withdrawal based on