Interest Rates up to 2.25% from 1.75%

[Jonny Ingbar]

Not sure if anyones mentioned in this thread but I’m confused at interest rates being raised to slow the economy to drive inflation down and then tax cuts to turbo charge the economy which would surely raise inflation

Yes, it's all counterintuitive isn't it.

The BofE are worried the pound could collapse, hence the raise, but it's the opposite to what is required in a recession, which they acknowledge we're now in.

Tax cuts by Truss are because she believes in trickle down economics (a Reagan/Thatcher policy) which has since been firmly discredited by the economists.

In essence, make the rich richer and some will eventually "trickle down" to poor.

 

[Pak_Doo_Ik]

Yes, it's all counterintuitive isn't it.

The BofE are worried the pound could collapse, hence the raise

I think that ship has sailed

The BoE thought inflation might top 5% back in March and its now in double figures, I’m beginning to think they don’t know what they’re doing either.

As you say the BoE have declared they believe we are already in recession and in a recession the policy is usually to cut interest rates, the pound is clearly broken at the moment and no amount of raising interest rates is going to fix that.

We need the BoE to do what is right at the moment for our country and raising interest rates isnt that. Everyman and his dog can see inflation is being driven by the cost of energy and not people have a large disposable income that is leading to frivolous spending.

 

[Cardiffdaffs]

I think that ship has sailed

The BoE thought inflation might top 5% back in March and its now in double figures, I’m beginning to think they don’t know what they’re doing either.

As you say the BoE have declared they believe we are already in recession and in a recession the policy is usually to cut interest rates, the pound is clearly broken at the moment and no amount of raising interest rates is going to fix that.

We need the BoE to do what is right at the moment for our country and raising interest rates isnt that. Everyman and his dog can see inflation is being driven by the cost of energy and not people have a large disposable income that is leading to frivolous spending.

“The pound is clearly broken” is a bit of a throw away line in your case to reduce interest rates. It’s a fine balancing act isnt it? You can’t let the pound collapse anymore otherwise import costs rocket even more and it’s consequent negative effects on the inflation rate.

 

[ForssAwakens]

I would imagine that this right wing government will stop the independcy of the BOE

they are working in separate directions as it stands

 

[changingman]

I would imagine that this right wing government will stop the independcy of the BOE

they are working in separate directions as it stands

I agree, I actually think one of the drivers of this policy is to put the government directly at odds with the BoE, at which point they can paint them as not fit for purpose etc, supporting their plan to bring it in house.

 

[Colgates_shaving_foam]

To me, it appears that the tories are aware that they have already lost the GE and are now just trying to take as much out of the economy for themselves and their mates, leaving a scorched earth country for Labour to inherit.

 

[Jonny Ingbar]

I think that ship has sailed

The BoE thought inflation might top 5% back in March and its now in double figures, I’m beginning to think they don’t know what they’re doing either.

As you say the BoE have declared they believe we are already in recession and in a recession the policy is usually to cut interest rates, the pound is clearly broken at the moment and no amount of raising interest rates is going to fix that.

We need the BoE to do what is right at the moment for our country and raising interest rates isnt that. Everyman and his dog can see inflation is being driven by the cost of energy and not people have a large disposable income that is leading to frivolous spending.

Very good point about the ever increasing wealth gap.

The amount of very poor is increasing as is the amount of very rich.

In such an imbalanced society it becomes harder and harder to apply such broad economic policy and expect it to affect the change intended.

Then you throw in the tax cuts, which the government seem determined to do, which will work directly against the interest rate rises.

We don't have a cohesive economic policy and I think things will get a lot worse because of it.

 

[newusername]

When we got our 1st mortgage rates were at 14.5%, things are a long long way away from those sorts of charges

At least its not the 15.85% it reached under Maggie.
That was a torrid time if you had a mortgage

You were also in receipt of MIRAS, so you were getting 30% off the interest portion of the payments. It is a reason why interest only mortgages & endowments were so popular.

 

[Pak_Doo_Ik]

“The pound is clearly broken” is a bit of a throw away line in your case to reduce interest rates. It’s a fine balancing act isnt it? You can’t let the pound collapse anymore otherwise import costs rocket even more and it’s consequent negative effects on the inflation rate.

But we have continued this nonsense of increasing interest rates to save the pound and its not working, isn't it at a 40 year low??? Import costs are already sky high and the interest are not having an effect.

In times of crisis the world look to stable currencies and at the minute that is not the Pound and no increases in interest rates are going to change that perception. Certainly while we have a government that changes leaders like most countries national football team managers and a fiscal policy that changes every 5 minutes.

What's the latest super idea to save the country?

Scrap the higher tax band and bankers bonuses.

The tories policy is now clear for everybody to see, save the rich and screw the rest and yet Brexit loving Brits living on the breadline will still lap up it and continue to blame the nasty Russia man and a Chinese virus.

 

[r00fie1]

You were also in receipt of MIRAS, so you were getting 30% off the interest portion of the payments. It is a reason why interest only mortgages & endowments were so popular.

I had an endowment and the cost of my mortgage shot up almost 300% from when I started.
We all found out later that endowment mortgages were a con.
We were screwed, even before the rise in interest rates.
The 30% made no difference.
I was on just over £6000 a year in 1986 when I bought my house [ie, rented it off a building society].
I ended up with three jobs and lodgers to help pay the huge increase.
Eventually I handed in the keys.

 

[Heine_Otto]

But we have continued this nonsense of increasing interest rates to save the pound and its not working, isn't it at a 40 year low??? Import costs are already sky high and the interest are not having an effect.

In times of crisis the world look to stable currencies and at the minute that is not the Pound and no increases in interest rates are going to change that perception. Certainly while we have a government that changes leaders like most countries national football team managers and a fiscal policy that changes every 5 minutes.

What's the latest super idea to save the country?

Scrap the higher tax band and bankers bonuses.

The tories policy is now clear for everybody to see, save the rich and screw the rest and yet Brexit loving Brits living on the breadline will still lap up it and continue to blame the nasty Russia man and a Chinese virus.

Scrapping the higher tax band!!!!!, the boss of our company on his £800,000 a year salary will be happy. I bet he was wondering how he was going to pay for his heating this winter.

I wonder if they considered raising the lower tax threshold instead? Surely that would have been of more benefit to those struggling? I just don't get it.

 

[El Guapo]

So, 1p cut in income tax for normal people but the top earners get a 5% cut in income tax over £150k……have I got that right? A bigger cut for the rich? Am I misunderstanding or this a p-take?

 

[festa5]

To me, it appears that the tories are aware that they have already lost the GE and are now just trying to take as much out of the economy for themselves and their mates, leaving a scorched earth country for Labour to inherit.

Scrapping the higher tax band!!!!!, the boss of our company on his £800,000 a year salary will be happy. I bet he was wondering how he was going to pay for his heating this winter.

I wonder if they considered raising the lower tax threshold instead? Surely that would have been of more benefit to those struggling? I just don't get it.

Think Colgate might have your answer there.

It's bonkers, this lot seriously scare me. Boris was worrying but he at least wanted to be liked, he wanted to stay in power.

This lot don't seem to give a ****.

 

[ForssAwakens]

it will take Labour 5 years to reverse before they can actually try to do what they want

 

[Colgates_shaving_foam]

Think Colgate might have your answer there.

It's bonkers, this lot seriously scare me. Boris was worrying but he at least wanted to be liked, he wanted to stay in power.

This lot don't seem to give a ****.

This is pretty much an open declaration of war on 95% of the country.

We've been heading in this direction for a while but any semblance of pretence of governing for all has well and truly gone now.

 

[Anton_Berg]

I liked it when you got 14% (instant access account) followed by a demutualisation payout (which I voted against).

 

[Redwurzel]

With inflation @ around 10% and interest rates @ 1.75%

The BOE to me had little choice.

I agree the BOE are not sure what they are doing but I have generally beleived that for over 20 years. Evidence sale of 50% of our Gold reserves @ $275/ounce and the price is now $1675/ounce even worse loss in £s.

My forecast is that interest rates in the UK will have to rise to at least 3.5% in 2023 so 2.25% this looks quite low to me.

 

[Nano]

So, 1p cut in income tax for normal people but the top earners get a 5% cut in income tax over £150k……have I got that right? A bigger cut for the rich? Am I misunderstanding or this a p-take?

You are misunderstanding. The top earners also get the 1%.

 

[El Guapo]

You are misunderstanding. The top earners also get the 1%.

I knew I’d got it wrong!!