I don't get how the interest rate hikes will curb inflation when it is being driven by energy and fuel prices. It just seems like the BoE are now being hard to be seen to be doing something.
Could the Government just slash inflation by simply applying a cap on energy prices (like the French did) that minimised the price increases. They could also cut fuel duty.
I would love it if someone with a better understanding of economics could explain to me (apart from Tory ideology) why this wouldn't work or why they aren't doing it?
I suspect they need the extra money on fuel duty etc to pay for the increase public debt costs?
They're just trying to lower demand, all across the board, so wealthy people save, rather than spend, which should bring prices down a degree. It's no good for those who are worse off though, as they have nothing to save, and have to spend every penny they have (and more) to survive, and inflation or high interest rates gives them less.
Can't cap what you don't own/ produce (which is about 25-30% of it), and they're probably wary of ******* off the energy producers as there's going to be big problems come winter. It's the producers making the cash mind, not really the distributors/ people we pay. They should be applying a windfall tax on UK producers though (and everywhere else should do the same), and use it to subsidise the worse off even more. The French own most of their own energy, especially electric as they have loads of nuclear. We have quite lot of renewables, solar isn't great in winter, but wind is, and we have more wind.
We could do with a drive to get companies and people to cut down on their energy use, which would lower demand and lower costs, but it only really works if every country does it, but saying that, the EU are going to do it/ doing it. We probably won't, as the Tories will use it as a stick to try and say "look, we don't need to cut energy, like the EU are", and most won't realise it's that mindset which is making everything cost more.
They probably need the duty to cover for other economic losses which they've brought on themselves to appease the far right/ rich. There's also the cost of Covid etc.
It's not all the Tories fault, but a hell of a lot of it is, or at best they have just significantly compounded it, and they're going to make the worst off pay for it, like they always do.
A years worth of recession won't do them any favours in the polls, and it will be slow growth after it.
Tough times ahead, especially for those who have it more than tough enough already.