How is raising the interest rate to stop spending going to help the economy...
You are looking at it from the wrong side of the fence. The BOE is increasing interest rates to stop inflation (ie, stopping people spending), thus hitting the brakes on the economy. That's the side you are on at the minute.
The other side is the government who is reducing tax in order to encourage spending. Now, the real plan is to reduce the tax on the wealthy, so that some of them will come up with some good ideas for a business, who then employs lots of people, and pays them so much money they can afford the increase in rates, with enough left over to spend. That literally is the plan, they said on the news yesterday!
We just need to hope those rich people creates enough money it will trickle down to the rest of us. "Trickle down economics".
The BOE will win the fight in the end.
Neither has done themselves any favours though. The BOE held rates too low for too long, and the government did everything they could think of to keep the gravy train running.
Personally, I think we're rolling down the hill so fast you either jump off now and kill yourself, or try and have a little fun till it falls over the cliff. There is a way to have fun, but you have to get rid of your morals......something until recently I'd never entartain, but since I've seen other people do it, even those in westminster, I'm giving it some serious thought.
You seriously think those muppets on the MPC will have base rates at 6% given their past performance? Try 0.5% in November followed by a few months of "wait and see" before deciding a couple more little 0.25% raises might just do it.
www.theguardian.com
news.sky.com
