BOE MINUTES - MPC considered Jan rate rise, 2 vote for hike

whatyadoinsucka

its still 6 against 2 for, easily a majority and neither of these voters hold the top positions.

no wonder the economy contracted
unemployment is still too high and a recovery unforeseen, therefore keep rates low.

if interest rates rose, would that curb food & fuel inflation, probably not..

angrypirate

whatyadoinsucka wrote: »

its still 6 against 2 for, easily a majority and neither of these voters hold the top positions.

no wonder the economy contracted
unemployment is still too high and a recovery unforeseen, therefore keep rates low.

if interest rates rose, would that curb food & fuel inflation, probably not..

Well let me see, if interests rates rose, the pound would get stronger against the dollar so the price of oil in sterling would fall, fuel price would fall and have a knock on effect on food, as all food is delivered using - you guessed it - fuel.

Based on that, Id say it probably would curb fuel and food inflation.

PS - notice how the pound has climbed a little today on the news that 2 members voted for a rate rise?

RenovationMan

angrypirate wrote: »

Well let me see, if interests rates rose, the pound would get stronger against the dollar so the price of oil in sterling would fall, fuel price would fall and have a knock on effect on food, as all food is delivered using - you guessed it - fuel.

Based on that, Id say it probably would curb fuel and food inflation.

PS - notice how the pound has climbed a little today on the news that 2 members voted for a rate rise?

Why use a hammer to crack a nut? If the only concern is fuel costs, then the government can simply reduce the tax for essential users such as public transport companies and haulliers. Raising interest rates in order to raise the pound just for cheaper oil would do more harm than good as far as our exports are concerned.

p.s. could it not have been that the slump was overdone and now there has been a correction?

Graham_Devon

RenovationMan wrote: »

Why use a hammer to crack a nut? If the only concern is fuel costs, then the government can simply reduce the tax for essential users such as public transport companies and haulliers. Raising interest rates in order to raise the pound just for cheaper oil would do more harm than good as far as our exports are concerned.

p.s. could it not have been that the slump was overdone and now there has been a correction?

But cutting the fuel duty simply isn't an option in reality. We have a debt problem. Cut the duty on fuel and it would only need to be taken elsewhere.

Although I totally understand what you are saying, it's simply not reality. Raising interest rates, however, is an option.

purch

if interests rates rose, the pound would get stronger against the dollar

Why ???????

Graham_Devon

purch wrote: »

Why ???????

Sometimes, I think I started something

RenovationMan

Graham_Devon wrote: »

But cutting the fuel duty simply isn't an option in reality. We have a debt problem. Cut the duty on fuel and it would only need to be taken elsewhere.

Although I totally understand what you are saying, it's simply not reality. Raising interest rates, however, is an option.

If you raise interest rates it'll have a larger impact on tax income than reducing fuel duty for a section of industry. I now a lot of the bears are pinning their hopes of a rate rise decimating home owners but the reality is that it will decimate businesses more. Companies are already struggling to get credit at decent rates, some are struggling to get credit at all. If rates are raised, companies will go under. If companies go under then the tax income from those companies and from their employees stop.

tomterm8

It's an interesting mix, all right. High inflation, low interest rates, nothing like full employment, negative growth, and a massive budget deficit.

ILW

RenovationMan wrote: »

If you raise interest rates it'll have a larger impact on tax income than reducing fuel duty for a section of industry. I now a lot of the bears are pinning their hopes of a rate rise decimating home owners but the reality is that it will decimate businesses more. Companies are already struggling to get credit at decent rates, some are struggling to get credit at all. If rates are raised, companies will go under. If companies go under then the tax income from those companies and from their employees stop.

I cannot see that a rise of .5% or so whould have much effect on most business borrowing. Most small businesses are paying 9 or 10% now and the effect would be negligible.

tomterm8

ILW wrote: »

I cannot see that a rise of .5% or so whould have much effect on most business borrowing. Most small businesses are paying 9 or 10% now and the effect would be negligible.

It's hard to see it would really have much of an effect on anything, the rates borrowers can borrow, and people actually lend to the banks at is so different from the base rate.

Maybe I am wrong, but the only effect it seems likely to have to me is reduce bank profits a little.