What exactly determines state savings interest rates?

galway_blow_in

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Nor do I.

It's completely plausible that UK inflation is 20% more than euro area inflation over the next five years though, which all else equal will see the pound depreciate by the same amount against the euro.
Perhaps but it’s quite possible all that is significantly priced in already?
 

ClubMan

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I’ve 50 k in the post office in the ten year tax free savings bond , interest is circa 1% , I’m going to withdraw it and buy UK government GILTS, 4% plus yield
Good luck with that.
The UK is a financial basket case.
What might look attractive in potential interest payments might be more than offset in currency exchange fluctuations.
Eventual default cannot be discounted right now.
 

galway_blow_in

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Good luck with that.
The UK is a financial basket case.
What might look attractive in potential interest payments might be more than offset in currency exchange fluctuations.
Eventual default cannot be discounted right now.
The Chinese have the same word for opportunity as crisis and the UK isn’t Argentina, they will starve half the population before defaulting , the financial capital of the world is not going to default on sovereign debt

The pound hasn’t moved especially low against the euro, nowhere it wasn’t at as recent as two years ago, everything is on its ass against the dollar
 
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joe sod

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Well the NTMA announced that they are fully funded for the rest of the year already, so they don't need to raise any money, so can't see any reason for them to raise their rates anytime soon.
Yes but that's just for this year, next year could be different story. Yes they managed to refinance alot of the debt at the ultra low interest rates which is good. But now they will have to pay much higher interest rates as more debt matures. I bet they will try and take advantage of this by raising interest rates on state savings bonds soon. The state still has an enormous debt level despite all the recent good news about corporation tax receipts and government surpluses
 

galway_blow_in

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Yes but that's just for this year, next year could be different story. Yes they managed to refinance alot of the debt at the ultra low interest rates which is good. But now they will have to pay much higher interest rates as more debt matures. I bet they will try and take advantage of this by raising interest rates on state savings bonds soon. The state still has an enormous debt level despite all the recent good news about corporation tax receipts and government
Budget was way too generous, not even like they could buy an election with it as no election next year
 

joe sod

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Budget was way too generous, not even like they could buy an election with it as no election next year
But maybe there is an election next year, maybe that's why this give away budget, they obviously know that the finances will be much worse next year. Maybe next spring after the public have benefited from the energy subsidies and tax cuts they will go for election. Michael Martin has finished his stint as taoiseach maybe they are pre emptying the likely moves by fianna fail backbenchers angry at the new green taxes and laws taking effect and the deep unpopularity of eamon Ryan and the green party in rural Ireland
 

galway_blow_in

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But maybe there is an election next year, maybe that's why this give away budget, they obviously know that the finances will be much worse next year. Maybe next spring after the public have benefited from the energy subsidies and tax cuts they will go for election. Michael Martin has finished his stint as taoiseach maybe they are pre emptying the likely moves by fianna fail backbenchers angry at the new green taxes and laws taking effect and the deep unpopularity of eamon Ryan and the green party in rural Ireland
None of the government parties are in good enough shape to elect to fight an election next year
 

Duke of Marmalade

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Has there ever been a default on sovereign debt denominated in the country's own fiat currency? I think even Zimbabwe "honoured" its debt in Z$. simply by printing more of them. Now, foreign denominated debt is a different kettle of fish.
 

joe sod

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Has there ever been a default on sovereign debt denominated in the country's own fiat currency? I think even Zimbabwe "honoured" its debt in Z$. simply by printing more of them. Now, foreign denominated debt is a different kettle of fish.
Did ireland get to denominated any of its debt in irish pounds in the good old days of the 70s and 80s? Well apart from state savings certificates
 

Duke of Marmalade

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UK Premium Bonds said:

NS&I to increase Premium Bonds prize fund rate​

27 September 2022

Millions of pounds more in Premium Bonds prizes will be up for grabs from next month as NS&I increases the prize fund rate from 1.40% to 2.20%, adding an expected £76 million to the prize fund for October.
 
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