David Cameron hints at interest rate rise to combat 'worrying' inflation

mr_fishbulb

David Cameron doesn't set house prices either, but it didn't stop people getting excited about this thread.

Generali

Interest rates are unlikely to rise while the money supply is falling unless the Pound collapses in value.

PhylPho

As me ol' grandma used to say, folks these days don't know they're born. I remember how Mrs P and I struggled to keep up with our mortgage at 12.5% interest in 1991. 'Twas 'ard, and the streets from't mill still cobbled an' all.

sabretoothtigger

Its hard to fathom their reasoning exactly. Unless forced I dont expect them to raise them much or as much as they probably should.

If inflation rises continually till year end we should see a fairly panicked response from the powers that be. Supposedly this will not occur, oil has dropped a bit recently, pound is weak but not drastically lower and imported costs should be fairly steady with vat rising a one off unless we see more of that in the June Budget now

man_of_faith

higher interest rates is great news for savers like me...bring on the rises

Thrugelmir

carolt wrote: »

Call me cynical but I think the BoE was 'leaned' on by Labour whilst in govt, and I don't think it will be any different with the Tories in.

Independent shmindependent.

That's precisely why the BOE publishes the minutes of its monthly meetings. To show its independence. Most importantly to explain in detail the rational behind its stance.

The only way the BOE committee was 'leaned' on. Is that it uses the same data as used by the Treasury, which is controlled by the Chancellor, on which to base its decisions.

brit1234

StiflersMom wrote: »

As to the OP's post, I would have thought that few home owners have anything to fear from rising interest rates. We all knew they were coming at some point. I can't see the BOE raising rates yet though, until economic recovery is truly cemented. Even those jokers in Capital Economics agree with this.

Indeed, the spread between the BOE base rate and mortgage products available in the market is so large that it will probably be some time before rising BOE rates will feed into rising mortgage payments.

It will be good news for savers though, as long as inflation remains low.

Interest rates are the principle control of inflation. Inflation is currently far higher than BOE predictions each time. Infact real inflation (RPI) is about 3 times the limit. Even Cpi is double and set to continue rising.

Remember it was too low interest rates that got us into the problem in the first place, lowering them again just delayed and increased the problem. For a healthy economy we need higher rates.

At the moment it discourages savers and banks cruically need savers to lend. At the end of 2010 into 2011 there will be a massive shortage of money to lend for businesses and mortgages. End result lending rates shoot up despite BOE base rates. They have already started going up with LLOYDS this week and Nationwide earlier.

It is a poor world for savers who are being shafted to bail out the reckless and the speculators.

IveSeenTheLight

mr_fishbulb wrote: »

David Cameron doesn't set house prices either, but it didn't stop people getting excited about this thread.

Your right, he doesn't set house prices, but his comments were an indicator that he did not intend to impliment policy which would result in house prices dropping.

Indeed he believes house prices will continue to rise

tessie_bear

man_of_faith wrote: »

higher interest rates is great news for savers like me...bring on the rises

i couldnt agree more

Cat695

IveSeenTheLight wrote: »

Your right, he doesn't set house prices, but his comments were an indicator that he did not intend to impliment policy which would result in house prices dropping.

Indeed he believes house prices will continue to rise

He's not likely to get many fans if he says "I'll force house prices down" now is he.

They will say anything to get the most votes.