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Interest rate rise benifits
pioneer22
Posts: 523 Forumite
24 years old on a 2 year fix, rates staying low is great for. So who do they benefit by going up?
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It cuts lending which cuts the amount of money in the economy which redues inflation: inflation is caused by too much money chasing too few goods. Cut the amount of money and you reduce inflation.0
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Anyone who is a net lender !!'In nature, there are neither rewards nor punishments - there are Consequences.'0
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It cuts lending which cuts the amount of money in the economy which redues inflation: inflation is caused by too much money chasing too few goods. Cut the amount of money and you reduce inflation.
Not much chance of this happening at the moment during this period of austerity, fiscal tightening and tighter credit conditions.0 -
RenovationMan wrote: »Not much chance of this happening at the moment during this period of austerity, fiscal tightening and tighter credit conditions.
Maybe. Inflation is as bad as deflation IMO.0 -
Maybe. Inflation is as bad as deflation IMO.
I agree, but then is the inflation that we have currently controllable by interest rates? There is no guarantee that raising rates would increase Sterling's value enough to allow us cheaoer imports and such a tactic would have a detrimental effect on our exports. Looking at what happened to the Euro during their abortive rate rise, there actually isn't any guarantee that raising rates would even boost the currency.0 -
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Higher rates tend to benefit anyone who is not in debt.
Its not really higher nominal rates, but real interest rates that is relevant as all the property owning oldies who bought in the 1970's will attest - or all the pensioners whose savings were decimated by inflation during the same period.
We will know we are 'back to normal' when interest rates are 'inflation plus 2%' - as a crude example.US housing: it's not a bubble - Moneyweek Dec 12, 20050 -
I still cannot figure out why a little deflation is such a terrible thing. Surely this whole site is about consumers trying to drive prices down.0
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I still cannot figure out why a little deflation is such a terrible thing. Surely this whole site is about consumers trying to drive prices down.
Nowt wrong with a little deflation (and we have seen it in things from computers to shoes) - the problem would be getting the government to cut spending at the equivalent rate.US housing: it's not a bubble - Moneyweek Dec 12, 20050
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