Bank England interest rate
- Thread starter Rooky007
- Start date
Soldato
I can see quite a lot of people getting caught out who have recently got onto the property ladder. I opted against a fixed rate and budgeted for a 2% rise for the second year of my mortgage. That 2% rise equates to quite a lot if you aren't prepared for it. And I can only imagine the amount of people trying to get a first time mortgage opting for the cheapest monthly rate possible, it's not going to end well for them.
Caporegime
Isn't the solution to our inflation actually rather simple? At the moment CPI inflation is 4.4%, way above the target of 2% meaning the BoE may have to put up interest rates despite the economy not being able to sustain an increase in the cost of borrowing. Therefore just change the inflation target to 4.5% - we'll be under target then, interest rates can stay low and all will be well - the 2% target is totally arbitrary, I don't see why it can't be changed to a different arbitrary figure. The added advantage is that excessive debts that were run up in recent years will slowly be eroded away over time.
Pretty much my take on it.
Additionally GDP negative last quarter, public cuts haven't bitten yet, increasing the base rate is going to stagnate the housing market further and increase people's mortgage payments & possibly rent too further tightening household budgets.
Finally - no-one gives a stuff about savers when GDP is going in the wrong direction - the Govt want people to spend. As soon as interest rates go up spending will stop and it'll be hello recession.
only vs a few other currencies.
the true value of the pound is going down - thats what inflation is.
Associate
Man of Honour
I'm still a little confused as to why rising rates at this stage would be of benefit?
Inflation in the past has normally been due to excessive consumer spending. This isn't the case. These inflation figures are surely a direct response from global food pricing, a 5% VAT increase inside a year and excessive fuel prices.. Rising rates now would surely wipe out any recovery and won't make any difference to inflation as food and fuel continue to rise. They have no control over this.
Not being funny but anyone starting a mortgage since rates have been extraordinary low should have factored this. Rates were only ever going one way.
Inflation in the past has normally been due to excessive consumer spending. This isn't the case. These inflation figures are surely a direct response from global food pricing, a 5% VAT increase inside a year and excessive fuel prices.. Rising rates now would surely wipe out any recovery and won't make any difference to inflation as food and fuel continue to rise. They have no control over this.
Not being funny but anyone starting a mortgage since rates have been extraordinary low should have factored this. Rates were only ever going one way.
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An immediate rate rise will cause more harm than good.
And yes - as you've said inflation is not just high - it's artificially high, big difference.
If the GDP quarter results Jan-Mar look shaky - which they may well do (VAT/public cuts/people worried over losing their jobs etc) - interest rates will be going absolutely nowhere.
A very good point but let's just bear one thing in mind - whilst I agree people on low interest rate mortgages should indeed have ample overhead - in actual fact their overhead is being eaten away by the rising cost of food/fuel etc.
My take on it too.
Minutes out later today, should provide some insight.
edit, just out: http://www.bankofengland.co.uk/publications/minutes/mpc/pdf/2011/mpc1103.pdf