Interest rates predicted to rise again tomorrow….

Pak_Doo_Ik said:
The only way interest rates increases have had any impact on inflation is that they have kept the pound steady against which has meant oil prices haven’t increased as much as they may have done.

Increased interest have had no impact on consumer spending because people stopped buying luxury items a long time ago and food inflation is worryingly high.

The only people benifitting from high interest rates are people who could afford savings.
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I agree that interest rates have kept the pound from falling - pound is now $1.26 up from below $1.10 a while back. Unleaded is down to £1.38/litre from £1.80/litre at its peak. The pound has even increased slightly against the Euro from 1.12. to 1.14.

Interest rates also affect property prices then in turn affect rental prices. Property prices have stopped rising as a generalisation as a result of higher interest rates.

Higher interest rates do help people with savings in cash, but they also help people who need to buy an annuity such as new pensioners. An annuity is an income for life, built with money saved in pensions over a life time. A 65 year old can now get an annual income of £6,900 per year with £100,000 of pension savings - that was only £4,000 two years ago.

It does take interest rate changes a time to work through - I would say around 12 months so increases made in the last 6 months haven't even worked through yet to the real economy.
 
Paintolerance said:
You are taking a very odd stance. As above, if we can only comment on subject matter we are experts on, this board and indeed social interaction on the internet is dead.

The BoE are applying simple supply and demand economics , as you are of course aware. Suppress demand, thus prices fall. It's a dead easy diagram.

However, these are exceptional times. A far more effective method would be for government intervention to address rampant profiteering by the likes of utility firms and other major corporations. Of course, profit is king so a proper solution is unlikely to be implemented.
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There could be some short term profiteering, but as a general rule in a capitalist system customers/consumers will switch in the medium to long term if a market is allowed to operate freely. If someone offers me gas/electric at say 30% less for the same quality and service I will switch. Martin Lewis will highlight where to switch to.

It feels to me that inflation is starting to turn and coming down from 10% - examples Sainsburys has just brought out a series of price reduced products, Telsa has reduced its prices, wholesale energy prices have dropped a lot in the last 6 months, petrol prices too, mobile phone prices are dropping and the price of phone packages is falling, house prices have stopped rising. It will take a while to show in CPI and RPI.
 
Redwurzel said:
There could be some short term profiteering, but as a general rule in a capitalist system customers/consumers will switch in the medium to long term if a market is allowed to operate freely. If someone offers me gas/electric at say 30% less for the same quality and service I will switch. Martin Lewis will highlight where to switch to.
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True in normal times. Not true now. There are no money saving switches to be had.
 
sherlock1969 said:
You know exactly what he was trying to say.

People who claim to be expert may in fact not be expert.
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So if that’s the case point to the people at Bank of England that are not experts and give your expertise in saying why you can validate someone’s expertise
 
And still no response on the BoE experts stance on lower than inflation pay rises are essential to get inflation back under control. I mean these are the experts so surely people must agree that is the correct approach.

Now I wonder if the original post has said something along the lines of

Interest rates are expected to rise tomorrow and now people will wake up to the reality that they cannot expect inflation matching pay rises because finally the BoE are getting a grip on this mess.

how that would have gone down???
 
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Pak_Doo_Ik said:
And still no response on the BoE experts stance on lower than inflation pay rises are essential to get inflation back under control. I mean these are the experts so surely people must agree that is the correct approach.

Now I wonder if the original post has said something along the lines of

Interest rates are expected to rise tomorrow and now people will wake up to the reality that cannot expect inflation matching pay rises because finally the BoE are getting a grip on this mess.

how that would have gone down???
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Telling people to accept less is morally wrong.

That action might be economically correct.

BoE is not the Government, the later has far more power to avoid us being in the situation where this suggestion can even happen.

The MPC exists to provide various opinions and analysis because the economy is not a straightforward argument. Some of which are morally wrong, some of which are enforced by Government policy decisions (or lack of).
 
Nano said:
Not all experts are as expert as they appear:

www.bbc.co.uk

Japan's cyber-security minister has 'never used a computer'

Yoshitaka Sakurada is responsible for ensuring the 2020 Olympic Games are not hacked.
www.bbc.co.uk
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What has this got to do with anything? "Politician is clueless" wow amazing insight.

The people on the BoE MPC are experts and randos on a football messageboard are not.

This country would be in a far better position if the government and the general population actually listened to experts from various fields rather than fluent in BS politicians and halfwits with large amount of social media followers.
 
BoroMart said:
So if that’s the case point to the people at Bank of England that are not experts and give your expertise in saying why you can validate someone’s expertise
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But that panel of experts often disagree. So I repeat, there is no single ‘expert’ view as you appear to think.

Therefore, are only some of them experts?
 
BoroMart said:
BoE don’t employ luddites and that’s what we are talking about here but of course people that have never worked in such a role know better, that’s the internet for you
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Yes, they do. They employed Rachel Reeves, who has about as much of an understanding of public finances as Rishi Sunak, i.e. very little.
 
BoroMart said:
So if that’s the case point to the people at Bank of England that are not experts and give your expertise in saying why you can validate someone’s expertise
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In fairness, I only posted that as a joke because I saw it on another site earlier today. There is a point to it though. Many people get jobs, even very senior jobs, due to connections and not because they are the best person for the job. Not saying that's what has happened at the BoE but I do sometimes wonder why someone would choose a job like that paying £150k in an industry that pays people millions. Are they really the experts or just the ones that failed to get the best jobs? Ditto politicians.

My previous point still stands though. Even as experts they are making decisions in something that is not a science. There is no right answer and being wrong but within the herd is more acceptable than being wrong outside the herd so reducing personal/reputational risk by copying others happens. Conformity is strong. On top of that we are taking about a situation that hasn't happened before. Look through historical rates and the big jumps up or down happen after major events. There have been reactions but I don't think so economists will agree that all the major decisions were the right ones.

They might be experts but they haven't experienced the current situation before. There is no precedent to follow. Economics relies on fairly simple models to explain what has happened. Forecasting is extremely difficult because models can't be complex enough.

I've not said what they have done is wrong. I've questioned whether it is right. There is a huge difference.
 
ForssAwakens said:
Ministers might not be experts but you’d expect there would be experts within the civil service behind that minister
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That’s true. The difficulty is that minister set the strategy in domains they have basic knowledge on. But the crap really hits the fan when the minister don’t like to hear the expert advice and experience of those civil servants. That’s basically the Government from the moment that Cummings got involved with Johnson and has carried on since
 
Nano said:
In fairness, I only posted that as a joke because I saw it on another site earlier today. There is a point to it though. Many people get jobs, even very senior jobs, due to connections and not because they are the best person for the job. Not saying that's what has happened at the BoE but I do sometimes wonder why someone would choose a job like that paying £150k in an industry that pays people millions. Are they really the experts or just the ones that failed to get the best jobs? Ditto politicians.
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That’s a fair point that there will almost certainly be some funny handshakes and Eton ties involved. But I’d expect there will be lots of people with exceptional expertise too
 
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