The Bank’s decision to keep interest rates at 0.25% last week may seem like business as usual. But there’s nothing normal about the way that monetary policy is operating at the moment. The longer the rates remain as low as they are, the more obvious it becomes that they’re no longer an effective monetary policy tool.
The Bank of England has been warned of complacency over the big rise in personal debt. In its toughest warning yet about the possibility of a rerun of the financial crisis that devastated the economy 10 years ago, the Bank of England admitted it was alarmed about the increase in the amount of money being borrowed on easy terms over the past year, reported the Guardian, 24th July 2017.
UK households are saving less than they ever have. The latest ONS data puts the UK household saving rate at just 1.7% in the first quarter of 2017 – the lowest rate since records began in 1963: