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Bank of England raises rates to 2.25%, despite likely recession


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A post with a trolling image and the replies have been removed.

 

A post with content that was copy and pasted from some site without a link has been removed.

 

Some posts attempting to hijack the topic into the discussion about the Truss election etc have been removed.  This topic is about:

 

Bank of England raises rates to 2.25%, despite likely recession

 

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10 hours ago, RayC said:

And whoever thought up this analogy, and thinks that this is how an economy functions, clearly has no knowledge of economics.

 

That humour clearly went over your head  -  I guess I am not surprised by that.

 

 

This won't suit your agenda either, but give it a go:-

 

https://www.mirror.co.uk/news/uk-news/martin-lewis-gives-good-news-28069836?fbclid=IwAR30JscJTwrUz6XfWH0Ol7Abl4tt7lQhXGvBbwU4BJfZNw2SquSpKpabhEU

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2 hours ago, hotandsticky said:

 

That humour clearly went over your head  -  I guess I am not surprised by that.

.... or underneath my feet.

 

We obviously have a different sense of humour if you found it amusing.

 

2 hours ago, hotandsticky said:

Why should I object to this article? It's just repeating the numbers.

 

Have you done/read/ listened to a broader analysis of the measures before (apparently) making up your mind that they are for the best? If not, you are the one with the agenda, not me.

 

As I wrote previously, Truss is being true to her word. If these initiatives work then great, the country will be in a better place. If not, we are probably b@#£ered for a decade or so.

 

(Bolding unintended)

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1 hour ago, Chomper Higgot said:

I think ‘The Left’ are almost certainly watching Truss tank the economy while handing tens of £billions to the already wealthy while thinking ‘this is her honeymoon period’.

 

I seem to recall you were supporting Truss for PM. I distinctly remember the TrussforPM hashtag on many of your posts during the leadership contest.

 

So you got what you wanted. A true conservative as PM. ????

 

Let's see if this mini budget has the desired effect. 

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26 minutes ago, JonnyF said:

I seem to recall you were supporting Truss for PM. I distinctly remember the TrussforPM hashtag on many of your posts during the leadership contest.

 

So you got what you wanted. A true conservative as PM. ????

 

Let's see if this mini budget has the desired effect. 

Let’s see if you can find a post in which I support Truss for PM.

 

 

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On 9/25/2022 at 7:43 AM, Chomper Higgot said:

The interest rates are set to control inflation.

 

The Chancellor of the Exchequer has just released tens of billions of pounds back into the economy which will increase inflation, so yes, you’re probably right, interest rates will rise again.

 

I also expect the tug of war between the Government and the BoE to end badly.

Look out for the rightwing press softening up the public with attacks on the BoE and its Governor.

 

Truss has promised growth of  2.5 %, in the face of a recession, low productivity and rocketing national debt.

 

The economics are against her, so she’s going to abandon economics and go with recklessness instead.

 

She needs to take control of the BoE in order to give full vent to her idiocy.

 

All the while millions in Britain can’t afford to eat regular meals.

 

 

My view is that the higher the BOE rates go, the more attractive that makes Sterling and the less it costs us to service foreign debt. Increased rates also attract foreign investment which combined with other tax cuts, should make the UK more competitive and attractive to foreign business. Oh yes, increased rates also help control inflation.

 

The downside is that domestic rates will increase also hence consumer and business borrowing become more expensive. In theory that is partially offset by increased interest on savings, assuming everyone has any!

 

I can see the logic and think it's a bold move and a sound one, the alternative after all is....what?

 

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49 minutes ago, nigelforbes said:

My view is that the higher the BOE rates go, the more attractive that makes Sterling and the less it costs us to service foreign debt. Increased rates also attract foreign investment which combined with other tax cuts, should make the UK more competitive and attractive to foreign business. Oh yes, increased rates also help control inflation.

 

The downside is that domestic rates will increase also hence consumer and business borrowing become more expensive. In theory that is partially offset by increased interest on savings, assuming everyone has any!

 

I can see the logic and think it's a bold move and a sound one, the alternative after all is....what?

 

You assume Truss has any say in BoE interest rates, she does not.

 

Moreover she has signaled she may remove BoE independence.

 

Right now the BoE is increasing interest rates to quell inflation and the Exchequer is borrowing money to reduce taxes, thereby increasing available cash in the economy.

 

This clearly is not a coordinated plan.

 

Running across a busy road with your eyes shut could also be referred to as ‘a bold move’, or ‘crass stupidity’.

 

 

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56 minutes ago, nigelforbes said:

My view is that the higher the BOE rates go, the more attractive that makes Sterling and the less it costs us to service foreign debt. Increased rates also attract foreign investment which combined with other tax cuts, should make the UK more competitive and attractive to foreign business. Oh yes, increased rates also help control inflation.

 

The downside is that domestic rates will increase also hence consumer and business borrowing become more expensive. In theory that is partially offset by increased interest on savings, assuming everyone has any!

 

I can see the logic and think it's a bold move and a sound one, the alternative after all is....what?

 

Higher interest rates may make sterling more attractive but why would it make investing in the UK private sector more attractive? 

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11 minutes ago, placeholder said:

Higher interest rates may make sterling more attractive but why would it make investing in the UK private sector more attractive? 

Once you invest in Sterling you have to do something with it after you've bought it! We're in a risk off mode presently so equities and bonds don't make much sense, private sector investment is one alternative. 

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26 minutes ago, Chomper Higgot said:

You assume Truss has any say in BoE interest rates, she does not.

 

Moreover she has signaled she may remove BoE independence.

 

Right now the BoE is increasing interest rates to quell inflation and the Exchequer is borrowing money to reduce taxes, thereby increasing available cash in the economy.

 

This clearly is not a coordinated plan.

 

Running across a busy road with your eyes shut could also be referred to as ‘a bold move’, or ‘crass stupidity’.

 

 

Large scale inflation during a recession is a serious problem, there is no single answer that suits both sides of the economic argument, at the same time. Lowering inflation has to be the priority hence that means increased interest rates, that's BOE's job. Stimulating growth is the governments job, hence the tax cuts, which in turn means increased government borrowings. Which of those two items would you suggest we forgo, quelling inflation or stimulating growth?

 

I think that trying to do both things at once is a bold move, I hope it doesn't backfire but as I said earlier, what is the alternative?

 

 

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19 minutes ago, nigelforbes said:

Once you invest in Sterling you have to do something with it after you've bought it! We're in a risk off mode presently so equities and bonds don't make much sense, private sector investment is one alternative. 

If someone is buying sterling as an investment that means they're're buying gilts (treasury bonds) and hoping  that it appreciates in value while it also yields interest. It has nothing to do with investing in a business.

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6 minutes ago, nigelforbes said:

Large scale inflation during a recession is a serious problem, there is no single answer that suits both sides of the economic argument, at the same time. Lowering inflation has to be the priority hence that means increased interest rates, that's BOE's job. Stimulating growth is the governments job, hence the tax cuts, which in turn means increased government borrowings. Which of those two items would you suggest we forgo, quelling inflation or stimulating growth?

 

I think that trying to do both things at once is a bold move, I hope it doesn't backfire but as I said earlier, what is the alternative?

 

 

The problem is that tax cuts, are a very ineffective way to stimulate growth. That path has been touted again and again. It only works if tax rates are so prohibitively high like 75 or 80 percent. It makes more sense to give cuts to lower income people since they are far more likely to spend it and stimulate the economy. Of course that will push up inflation but the benefits for those with lower income should outweigh the inflationary effects. 

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1 minute ago, placeholder said:

If someone is buying sterling as an investment that means they're're buying gilts (treasury bonds) and hoping to that it appreciates in value while it also yields interest. It has nothing to do with investing in a business.

It doesn't have to be gilts, why must it be so? Overseas investors are able to invest the same things that UK citizens are, hedge funds, property, markets, private sector business, venture capital etc etc. 

 

I'm an overseas investor who invests globally, including in the UK. I am invested in UK property, UK income and accumulation funds and also in a UK business, anyone practically can do exactly the same.

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2 minutes ago, placeholder said:

The problem is that tax cuts, are a very ineffective way to stimulate growth. That path has been touted again and again. It only works if tax rates are so prohibitively high like 75 or 80 percent. It makes more sense to give cuts to lower income people since they are far more likely to spend it and stimulate the economy. Of course that will push up inflation but the benefits for those with lower income should outweigh the inflationary effects. 

OK, if that's what you think. I disagree, I think trickle down economics works and that giving hand outs to the lowest income group is nothing more than financial aid and nothing to do with stimulating the economy. Trickle up economics, which is what that is, doesn't create jobs or stimulate new investment, ....I think.

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