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

Nosmo-King said:
I somehow can’t see that day coming to fruition - have you tried being in touch with 5 year olds?! I guess it is in their interests to be taught by one who gets so much wrong- at least they can get corrected by someone who knows how to write in English!!!
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Ridiculous 🙄
 
Interest rates are still very low. I'm not too sure how it effects pricing at such low levels apart from sending out a future picture.

A good point above about £/$ movement
 
Stops borrowing, people stop buying so prices have to come down or go up less to persuade us to buy again. In theory. Blaming it all on oil though is Tory rubbish. Oil prices cheaper than a few years ago per barrel.
 
Steve Bee said:
Stops borrowing, people stop buying so prices have to come down or go up less to persuade us to buy again. In theory. Blaming it all on oil though is Tory rubbish. Oil prices cheaper than a few years ago per barrel.
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That only works when people are spending excessively on luxuries. Just not the case at the moment.
 
As an Economist since graduating and working for financial instutions when rates hit 18% and we had no choice because a goverment locked us into the Exchange Rate Mechanism (ERM), which we were forced to leave as it was against our indepence, ultimately. Interest rates and inflation now are insignificant, temporary there are people reacting. What will they be saying in a years time when inflation could be negative. Will they demand a wage cut?
 
Interest rates rising will hurt some people, but there has to balance, we can't have extremely cheap money for ever.

The inflation target long term is 2.5% so I would expect interest rates to be slightly higher long term say 3.5% but we are still not near 3.5% are we?

These are strange times -we have lots of jobs but we are told we are close to recession.
 
Yes strange times. We have recorded unemployment at a low.
And companies say they cannot find staff.
Then others are going to foodbanks?
Why - just get a job
There are plenty out there
 
higgyboro35 said:
Yes strange times. We have recorded unemployment at a low.
And companies say they cannot find staff.
Then others are going to foodbanks?
Why - just get a job
There are plenty out there
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Strangely there are less people employed than before the pandemic, probably due to people leaving the working pool such as taking early retirement. Companies can't find staff for lots of reasons such as pay too low for the role, no one with wanted experience and/ or qualifications or the roles can't offer set number of hours or set hours or any sort of long term stability. I am guessing quiet a lot of these unfilled position are low paid ones and would need topping up with benefits so even if they work they are not much better off and in few circumstances worse off.
 
Nosmo-King said:
Not an economist but I can’t see how you can control inflation when the 2 motivators contributing to inflationary pressures are outside the BOE control. Can anyone advise?
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Well if wages go up as well then that will cause prices to go up because there will be more money in circulation. Cut the money supply and shops have to reduce prices in order to sell stuff.
The thing is this all happened before in the early 70s.
We could have and should have weaned ourselves off fossil fuels with solar, hydrogen and wind power.
Oil companies finance our political parties just like in America, so it hasn't happened.
If we stopped the cayman island registered companies such as Facebook from avoiding tax then there would be no need to have poverty in the UK.
 
Borothruandthru said:
Well if wages go up as well then that will cause prices to go up because there will be more money in circulation. Cut the money supply and shops have to reduce prices in order to sell stuff.
The thing is this all happened before in the early 70s.
We could have and should have weaned ourselves off fossil fuels with solar, hydrogen and wind power.
Oil companies finance our political parties just like in America, so it hasn't happened.
If we stopped the cayman island registered companies such as Facebook from avoiding tax then there would be no need to have poverty in the UK.
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If the UK offered a more sensible rate of corporation tax companies wouldn’t feel the need to park profits in other countries. Sometimes less is more!
 
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