BOE Rate 5.25%

Markviduka

Markviduka

Active member
Does anyone get the feeling our government and the BOE, just follow suit to the US Fed? Surely if we’re to get out of this mess we needs to start to show some initiative. Inflation is still high, yes I get that, rate cuts and putting
money back into peoples pockets surely has to be a priority. Forecasts are that there’s a global recession on the horizon, oil & gas prices in decline, which in large dictate inflation or certainly have this time.

Be a maverick, get on the front foot and reduce rates. Get things moving again.
 
It upsets all the oldies who have no debt and loads of savings that generally vote for the con artists
 
Priv said:
It upsets all the oldies who have no debt and loads of savings that generally vote for the con artists
Click to expand...
You’re dead right, it would put a shake up in the markets and the markets don’t like change, or so we’re told.
 
Markviduka said:
You’re dead right, it would put a shake up in the markets and the markets don’t like change, or so we’re told.
Click to expand...
The US has already said they expect rates to fall soon. That is why stock markets around the world have risen about 2% this morning.
 
Surely falling oil and gas prices will help reduce inflation and generate growth? We've been told it has been the primary reason for prices going up so quickly over the last few years.
 
junos_boots said:
The US has already said they expect rates to fall soon. That is why stock markets around the world have risen about 2%
Click to expand...
Exactly, get on the front foot and reduce rates now. The BOE was caught sleepwalking in not foreseeing the current inflation rate, it was way too slow to react.

Should the republicans get back in later next year inflation will be restored t, as generally speaking oil and gas are cheaper when they’re in.
 
junos_boots said:
She doesn't want another go as she has confirmed she will be taking the full pm retirement package even though she only served about 40 days rather than the full 40 years that most final salary deals require
Click to expand...
Shameless isn't it. Don't they have to actually claim for it as well as it's meant to cover cost of fulfilling "public duties" (can't imagine she'll have many of them mind).
 
Don’t worry we’re not a million miles away from a recession and then rates will drop.

Honestly it’s like Economics for Dummies (or the shampoo rule as I call it) high inflation, increase interest rates, increasing interest rates slows down the economy so we enter a recession, once in the recession decrease increase rates to kick start the economy, rinse and repeat as needed.
 
Markviduka said:
Does anyone get the feeling our government and the BOE, just follow suit to the US Fed? Surely if we’re to get out of this mess we needs to start to show some initiative. Inflation is still high, yes I get that, rate cuts and putting
money back into peoples pockets surely has to be a priority. Forecasts are that there’s a global recession on the horizon, oil & gas prices in decline, which in large dictate inflation or certainly have this time.

Be a maverick, get on the front foot and reduce rates. Get things moving again.
Click to expand...
We've been looking their way for leadership for far too long. .
 
BOE's main job is to get inflation below 2.5% - its currently 4.6%? - 5.25% interest rates seems reasonable at present to achieve lower inflation. BOE's job is not to provide low interest rates for house buyers. Until very recently interest rates were below inflation, for about 14 years.

The BOE looks at UK economic stats to determine where interest rates such as wage rises, GDP growth etc
 
The downside with interest rates falling is that house prices will start to rise again making them even more unaffordable to many.
 
Raising interest rates is designed to slow the economy and in turn reduce demand which reduces inflation. Knowing this I am not sure why Sunak said he would grow the economy as one of his 5 pledges.

I thought he was meant to be one of the brighter ones?
 
MolteniArcore said:
Raising interest rates is designed to slow the economy and in turn reduce demand which reduces inflation. Knowing this I am not sure why Sunak said he would grow the economy as one of his 5 pledges.

I thought he was meant to be one of the brighter ones?
Click to expand...

Tech bro who can't use Whatsapp properly. I'm not so sure.
 
MolteniArcore said:
Raising interest rates is designed to slow the economy and in turn reduce demand which reduces inflation. Knowing this I am not sure why Sunak said he would grow the economy as one of his 5 pledges.

I thought he was meant to be one of the brighter ones?
Click to expand...
In relation to Johnson and Truss he probably is brighter, relatively. In relation to an average person he is thicker than a whale omelette, good connections though apparently.
 
Colgates_shaving_foam said:
In relation to Johnson and Truss he probably is brighter, relatively. In relation to an average person he is thicker than a whale omelette, good connections though apparently.
Click to expand...

Hislop made a point that whilst Johnson and Truss were hopeless, they were at least career politicians with some vague understanding of the concept. I'm not sure Sunak gets it at all. He seems to have no real allies in his own party either which is problematic for him.
 
It's times like this you realise the independence of the BoE doesn't make sense. There are several levers that a country can pull to affect supply/demand and therefore inflation. The BoE is pulling one lever (which reduces demand) which should cause a shrinking of the economy (aka a recession) while the government are using other levers to increase the size of the economy (they are just bad at it). It doesn't make sense to try and do both things at once.

The BoE shouldn't be/have been raising interest rates. Their one lever is there to reduce demand but inflation isn't being caused by increased demand, it is being caused by reduced supply. The only way to reduce demand enough (for expensive essential goods like wheat and energy) is to cripple the economy which would be a stupid thing to do to yourself. That lever is there for when the country is becoming too successful and wages are spiralling beyond costs.

The government set itself the target of halving inflation and then gave themselves a big pat on the back when they achieved it but they didn't do anything to achieve it, it happened because it was being caused by something outside of their control. Inflation went up because of external factors and it has reduced because of them. The government shouldn't be trying to control inflation, it should be trying to reduce the impact of inflation. It could have done that by ensuring wages kept up with costs. It could have kept costs down by banning things like RPI+ inflation clauses in contracts and the price gouging and mandatory inflation rises we see in areas that are unaffected by the external price rises. Instead they have pitched themselves, as the Tories do, on the side of profits and not on the side of the people. Labour have shamefully not stood up for workers and demonstrated how wages rising doesn't cause an inflationary spiral. It's basic maths. They've been completely missing the entire time on inflation in fact.
 
I am not an economist, but if we have interest rates at around 1% and inflation at around 10% we have a major problem. There an enormous incentive to borrow @1% and buy stuff like housing/collectables/Bitcoin/gold and watch it rise. I think that was the situation in mid 2022.

To me the ideal position is to have interest rates just above inflation. It all about balance.

5% interest rates are tough on first time buyers and young buyers, but house inflation above 10% is probably worse certainly for first time buyers as it puts house buying out of their reach.
 
You must log in or register to reply here.
Back
Top