What will Mervyns excuse be this time?

Graham_Devon

HAMISH_MCTAVISH wrote: »

WHat always amazes me about these threads is the apparent (and mistaken) belief from some posters that a rise in interest rates will automatically reduce inflation, and in a timely manner.

The actual process, given the current environment, would be more like this.....

BOE rase rates to combat the inflation caused by tax rises.

Hundreds of millions of pounds are removed from the economy.

Consumer spending is reduced.

Business investment is reduced.

Jobs are lost.

Consumer spending reduces further.

Tax revenue falls.

Public spending on benefits increases.

Inflation reduces.....

But then the government has little choice but to borrow more or raise taxes again. Which takes us back to square one with rising inflation.......

If all that happens, on a mere 0.5% rise, the country is absolutely screwed and we may aswell all give up now.

On the other hand....you seem to think there is money to propell house prices. Weve been told everyone can cope with 5% rates, as thats what they paid before....but when it comes to raising rates from 0.5%, you describe the economy basically collapsing. Make up minds!

It's no coincidence the ones saying the media, and anyone else who talks of rises, are wrong....they are the same people who consistenltly hope for house price rises....just wish people could seperate the two things when talking about this.

Graham_Devon

RenovationMan wrote: »

So your saying you dont want a rate rise just for your own personal reasons or to cause people to get reposessed and lower house prices, you want a rise because you believe it would be for the good of the economy?



Ah. Shame. You are saying that you want a rate rise for your own personal reasons and because you want reposessions to lower house prices, and not for the good of the economy.

Glad we sorted that out. Your so altruistic AD9898, surely sainthood is only weeks away?

Many of us own houses, some pay mortgages even, and can see a rate rise is probably the right thing to do now...if not very soon.

It's not just now we have to think of, it's the problems being stored up the longer we keep rates low. This is one of the things the media is now starting to pick up on.

Shame you seem to have gone down the route of accusing anyone who doesn't share your view as wanting people chucked out of their homes.

shortchanged_2

I think Merv was saying that inflation will rise in the future in the hope that it will actually do the opposite, which is normally what happens with his predictions.
Unfortunately for once Merv was actually right but then again you don't really need to be a professor of economics to know that inflation will continue to rise, at least in the near future.

AD9898_2

RenovationMan wrote: »

Your so altruistic AD9898, surely sainthood is only weeks away?

No, I'm just not a greedy money-grabbing b4stard, who wants something for nothing (which to all intents and purposes is what house price rises that exceed inflation are).

I'm content and happy with my lot, chasing the end of the rainbow is futile and ultimately a miserable existence.

padington

Do you really think the BOE can hold back the inflationary pressure if oil increases in price by 50% ? What with the global economy just pumped to eye balls with dollars we are in for one hell of a ride and i really don't think the BOE can do anything about it.

Houses require first time buyers and therefore low interest rates and for that reason, I think sitting on property right now is no clever move.

Wheelbarrows on the other hand, they could become handy.

whatyadoinsucka

i've said it before and i'll say it again 'inflation' does not matter at the current time..

why is the bbc going on about 4% and BR rises.. we all knew inflation was high, so what..

job losses will affect peoples ability to pay mortgages not 0.25% rises..

Graham_Devon

Interesting that Europes inflation rate is 2.6%.

And yes, thats before stripping out tax rises.

padington

whatyadoinsucka wrote: »

i've said it before and i'll say it again 'inflation' does not matter at the current time..

Tell that, to these guys ...

https://forums.moneysavingexpert.com/discussion/3054390

RenovationMan

Graham_Devon wrote: »

Many of us own houses, some pay mortgages even, and can see a rate rise is probably the right thing to do now...if not very soon.

It's not just now we have to think of, it's the problems being stored up the longer we keep rates low. This is one of the things the media is now starting to pick up on.

Shame you seem to have gone down the route of accusing anyone who doesn't share your view as wanting people chucked out of their homes.

I can only analyse the data I am given, if people say they want higher interest rates in order to lower house prices, then what they are saying is that they want people with mortgages to struggle so that they have to sell their houses for lower amounts.

I dont necessarily mind this, as I have no axe to grind either way, but lets please stop the pretence, it's embarrassing.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Weve been told everyone can cope with 5% rates, as thats what they paid before....but when it comes to raising rates from 0.5%, you describe the economy basically collapsing. Make up minds!.

Two different things.

Most people can afford a mortage payment at 5% just fine. They did in 2007, they can now. Not the 2% more who are unemployed perhaps, but the other 98%, yes.

But raising rates too soon will take billions out of the economy, causing double dip recession, an increase in unemployment, more business failures, less investment, etc. Bad news all around, for homeowners and everyone else.

By campaigning for higher rates, you're basically cutting off your nose to spite your face.