Interest Rates

[sandmaster]

I've always thought such low interest rates were a bad idea. Hiuse prices have shot up as a result. Now many will struggle to maintain mortgage payments. But the latest increase in rates seem to me to be wrong. I get that this is aimed to reduce money supply and therefore consumer demand leading to lower inflation , but this round of inflation is not consumer led it is global due to energy prices and will really hit people already unabke to afford food and heat . Perhaps economists among us can give me some enlightenment

[Zacs-Master]

It's designed to bring down retail prices to stem the cost of living rise which is growing at its fastest rate for decades as well as getting debt to fall which will mean interest rate rises can be minimised.

[youngmafbog]

Interest rates have been far too low for too long. Low interest rates are a real problem when it comes to driving/running the economy, it means one avenue of controlling the economy is lost - unless you want deflation - and no one wants that.

It is a fine line though, they will need to be careful as along with Sunaks undoubted austerity measures and the highest general taxation for decades we are in danger of pushing the UK into recession.
//will really hit people already unabke to afford food and heat //

There are always winners and losers when adjusting an economy, however just at present I'm doubtful many are in real poverty - just yet.

[Peter Pedant]

Perhaps economists among us can give me some enlightenment

prices will continue to rise next year.

supply eek - limit the supply and that drives up the price - simples

[bobbinwales]

I get that many people with morgages will need tighten there belts and restaraunts, airports, new car sales, luxury goods may be cut back on and that may force some price's down, and also more will save more... but that effects growth and jobs. People will also be more careful and wait for bargain and it will push house prices down? But inflation wont fall too much until energy prices fall, interest rate's rise wont effect that. And my worry is people may press for higher wages to afford there mortgage increase.
It allways seems a blunt instrument to me