Not fully, but it plays a major part.You are blaming 15 years of low interest rates on the 2022 inflation?
The way things are going they should be having a weekly meeting...Main reason I was expecting 0.5 is fed and no meeting next month?
Ideally 0.25 month on month would be better. But with a missed meeting 0.5 seems required
Today's rate setting meeting is going to be interesting. There's a chance inflation can be controlled should a 0.5% materialise and that those rate rises keep coming.
I think they may chicken out with 0.25%, however that would just be delaying the inevitable as rates will have to go up much further at a later point. Central Banks know where things are headed, all led by the Fed.
I'm not sure, house prices were rising faster in the years before the crash it really took off about 1997, the market just resumed trend after the crash cant really pin it on low interest rates.Not fully, but it plays a major part.
House prices have steadily increased over those 15 years, which fits exactly with QE and ultra low interest rates. The central banks have created an "everything bubble" though with their poor policies and like all bubbles, it pops once the artificial stimulus is taken away. The alternative is hyperinflation which is a far worse outcome.
Agreed on house prices before QE and low interest rates before 2008, however 2008 is the time house prices should have crashed as they were already too expensive. QE and low interest rates allowed the party to continue. Now the punch bowl is taken away (finally), I wonder where prices go next?
10-20% crash.
And when I say crash, I don't mean a blip like that chart shows in circa 2008. That fall would have been much further without QE and low interest rates.
Even with a 50% crash, houses are still unaffordable, more so if fuel, energy and food prices continue to increase.
I do agree, but we're not in normal times. The gift that was QE will have huge consequences one way or the other. An economy based on ever-increasing house prices is only going to end in disaster.A 50% crash takes us back to house values as they were in 2001 - we're not talking about impacting a small number of home owners here, large swathes of the entire population will be in negative equity, basically anyone with a mortgage. Affordability of houses is a moot point because 2/3 of the population will be unable to buy / sell. Unless a homeowner dies or moves into retirement / care home, houses will not come onto the market.
Probably not today, but these piddly 0.25% raises are only going to add up over time, so eventually it comes out in the wash whilst prolonging people's agony in the meantime.Reckon the rate will go up 1%, people gonna **** themselves.
I do agree, but we're not in normal times. The gift that was QE will have huge consequences one way or the other. An economy based on ever-increasing house prices is only going to end in disaster.
However, that cap was below the cost of production for several generators, who decided to withhold capacity.