How does increasing the interest rate control factors such as oil and energy prices?

Nosmo-King said:
Which is fair enough - although the pound v the dollar the pound has dropped significantly against the dollar - so interest rates haven’t helped to date
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Interest rates in the USA have been rising faster than the UK.

Not all inflation is due to stuff from Russia and Ukraine. House prices and rents have been rising by 10% a year a lot of this is due to very cheap money. Its hard on some but mortgages have to rise in cost to stop house prices rising at 10% per year.
 
The Ruthsayer said:
Less than 4% percent difference in the Euro: Pound between Brexit Day and now, so fx would not have significantly helped here.
Not a comment in Brexit per se, just a fact.
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Not having much of a manufacturing base is not helping our trade balance. We have significantly increased our base of civil servants of late but they don't export much.
 
The Ruthsayer said:
Less than 4% percent difference in the Euro: Pound between Brexit Day and now, so fx would not have significantly helped here.
Not a comment in Brexit per se, just a fact.
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I was thinking more about the addition of export clearance costs + the extra red tape / checks that Brexit has brought . Also the supply chain issues due to lack of EU drivers & general workers .
 
Magicman70 said:
I was thinking more about the addition of export clearance costs + the extra red tape / checks that Brexit has brought . Also the supply chain issues due to lack of EU drivers & general workers .
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Fair points Magicman. Distrust and intransigence aplenty. There is more than enough labour in this country, just the will to pay enough, and strip out profits from upper management and the sacrosanct dividend is lacking.
Coming from a family of lorry drivers, I’m confident in saying that The Bword is only one contributing factor.
 
Redwurzel said:
Not having much of a manufacturing base is not helping our trade balance. We have significantly increased our base of civil servants of late but they don't export much.
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Agreed. Globalisation has done little for the poorer and working classes, though it is heretical to say so as FoM is a direct subsidiary of this monster.
 
From Simon Nixon's Twitter (Chief lead writer at The Times):

"Another remarkable stat from BoE: Core goods price inflation rose to 8.0% in UK in April, compared to 3.8% in euro area and 6.4% in US. What on earth could have happened to the UK to drive inflation to such uniquely ruinous levels? BoE too timid to say the word."

Another from Simon Nixon:

"Extraordinary stat via #WATO: in 2008, when oil prices peaked at $144/barrel, no one in Britain paid more than 120p per litre of petrol. Today, oil price is $113 but pump prices 186p litre. Difference is collapse in sterling from $2 to $1.20. Welcome to the Brexit."

Sterling is on the decline still... why? An unpredictable Prime Minister. How can markets have confidence in the UK when Johnson is happy on a whim to break international law, cause trade wars etc. They are reactionary and just pluck policy out of the air dependant on which way the wind is blowing. Johnson, by not resigning, is dragging the economy and currency down with him.

The BoE predicting a peak of 11% inflation... so expect something more like 15% as they have been lacking in this crisis.

We'll be in the clarts for a good 2-3 years, if not longer. The current Government can't blame Brexit as they are the ones who campaigned and implemented it. So we have denial and deflection. Currently we are blaming the immigrants, the forecourt owners and rail strikers. The poor are getting a bit of extra help so they are off the menu for now but we all know they are fair game when the time is right.

The worrying thing is Johnson's threat to change the NI Protocol. Any kind of increased trade friction with the EU that would likely result would be a hammer blow to our economy.

When you look at the economic growth numbers over the last 12 years of Tory Government it is shameful. The one thing you have to give them kudos for though is convincing the public that the public finances are in safe hands with them!

And today the Tories are telling us we will continue with their high tax policy for the next 2 years. They just want to keep us little people in our places and keep feeding us the BS.
 
MolteniArcore said:
From Simon Nixon's Twitter (Chief lead writer at The Times):

"Another remarkable stat from BoE: Core goods price inflation rose to 8.0% in UK in April, compared to 3.8% in euro area and 6.4% in US. What on earth could have happened to the UK to drive inflation to such uniquely ruinous levels? BoE too timid to say the word."

Another from Simon Nixon:

"Extraordinary stat via #WATO: in 2008, when oil prices peaked at $144/barrel, no one in Britain paid more than 120p per litre of petrol. Today, oil price is $113 but pump prices 186p litre. Difference is collapse in sterling from $2 to $1.20. Welcome to the Brexit."

Sterling is on the decline still... why? An unpredictable Prime Minister. How can markets have confidence in the UK when Johnson is happy on a whim to break international law, cause trade wars etc. They are reactionary and just pluck policy out of the air dependant on which way the wind is blowing. Johnson, by not resigning, is dragging the economy and currency down with him.

The BoE predicting a peak of 11% inflation... so expect something more like 15% as they have been lacking in this crisis.

We'll be in the clarts for a good 2-3 years, if not longer. The current Government can't blame Brexit as they are the ones who campaigned and implemented it. So we have denial and deflection. Currently we are blaming the immigrants, the forecourt owners and rail strikers. The poor are getting a bit of extra help so they are off the menu for now but we all know they are fair game when the time is right.

The worrying thing is Johnson's threat to change the NI Protocol. Any kind of increased trade friction with the EU that would likely result would be a hammer blow to our economy.

When you look at the economic growth numbers over the last 12 years of Tory Government it is shameful. The one thing you have to give them kudos for though is convincing the public that the public finances are in safe hands with them!

And today the Tories are telling us we will continue with their high tax policy for the next 2 years. They just want to keep us little people in our places and keep feeding us the BS.
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The second quoted paragraph is a little disingenuous, suggesting Brexit is wholly responsible for the rise in oil prices. It is not. As a comparison, GBP lost a much greater percentage of its value (25%) due to the GFC in 2008 as most looked to the safe haven of the dollar. Further, until Billy Bunter began to show his abilities, GBP was within 10% of its pre-Brexit value (to Jan 2021).
 
The problem is the BoE are so fixed in their approach. Increase interest rates to drive down inflation, that’s all they know. But that only works when the inflation is caused by excessive consumer spending.

It will do nothing against the current inflation causes. All it will do is increase the cost of living crisis for millions of people.
 
The Ruthsayer said:
The second quoted paragraph is a little disingenuous, suggesting Brexit is wholly responsible for the rise in oil prices. It is not. As a comparison, GBP lost a much greater percentage of its value (25%) due to the GFC in 2008 as most looked to the safe haven of the dollar. Further, until Billy Bunter began to show his abilities, GBP was within 10% of its pre-Brexit value (to Jan 2021).
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I agree with the point you make but the point raised a bit further down remains - Brexit is a contributory factor to us faring worse than other countries and will hamper our recovery meaning MORE pain for LONGER than our neighbours. But they (most Tories and the Government) can't admit it. People need to wise up to this.

Not all Brexit's were the same. This is Johnson's Brexit and appears to be the worst of all worlds and was only ever a grab at power. Coupled with his ineptitude he's dragging us all down, as are the Tory party for not getting rid of him.
 
I would concur with the vast majority of that. Probably worth a separate thread, but extensive research by LSE and UCL suggested that FOM had resulted in a worsening of economic circumstances for the bottom 20% of the working society in the UK. I can post the papers, and although the maths is about 1year degree level, the prose accompanying the formulae is lucid and accessible. Perhaps if we had handled Brexit in a non-jingoistic, sensitive, respectful and diplomatic manner, things may have been very different with our EU friends. Of course, what we received was the exact opposite.
 
sherlock1969 said:
The problem is the BoE are so fixed in their approach. Increase interest rates to drive down inflation, that’s all they know. But that only works when the inflation is caused by excessive consumer spending.

It will do nothing against the current inflation causes. All it will do is increase the cost of living crisis for millions of people.
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The BoE really only has three roles - issuing currency, making sure that the financial institutions and processes are robust and secure, and regulating the economy through monetary policy. The government is responsible for fiscal policy, so I don't know what else the BoE could do to regulate or stimulate or dampen the economy.
 
Soutra said:
The BoE really only has three roles - issuing currency, making sure that the financial institutions and processes are robust and secure, and regulating the economy through monetary policy. The government is responsible for fiscal policy, so I don't know what else the BoE could do to regulate or stimulate or dampen the economy.
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Then it should do nothing. At least not adding to people’s financial difficulties.
 
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