Interest rate rise?

Malthusian

ilovehouses wrote: »

If they go up that would be the second time in a decade.

It's the first real interest rate rise in 11 years. The increase in November 2017 was just undoing Carney's meaningless dummy spit over Brexit.

System

ilovehouses wrote: »

Wishful thinking. Current circumstances don't require any pain to be inflicted. Wage growth was hardly running away at 0.5%, the economy is hardly going gangbusters and inflation is low. If a 0.25% increase today is equivalent to a 0.75% increase of yesteryear I wouldn't be holding my breath for three of them anytime soon.

I'm glad you've got on board with realising normal is a moving feast rather than arbitrary average of rates over the last few centuries.

Interest rate rises are not intended to be a day at the spa. They are intended to be unpleasant for over-indebted individuals and companies.

lisyloo

They are intended to be unpleasant for over-indebted individuals and companies.

If it's intended to change behaviour then that is shutting the stable door after the horse has bolted.

System

lisyloo wrote: »

If it's intended to change behaviour then that is shutting the stable door after the horse has bolted.

Perhaps. But over-indebted companies and individuals will feel the pressure, and may not be able to stay afloat. That is part and parcel of capitalism.

System

ilovehouses wrote: »

£26/month for Londoners who aren't on a fixed rate according to the Standard.

Say there's three of them so 3 x 0.25% (equivalent to a pre-crisis 3 x 0.75% according to your theory). That's unlikely to happen soon but it's still only £78/ month - a couple of takeaways and a few coffees.

I'm sure some people will be tipped over the edge but the vast majority will hardly notice. Think more unwelcome than unpleasant.

If small increases cause lots of pain, the Bank of England will stop raising. If small increases have little or no effect, it will carry on increasing until they do.

System

ilovehouses wrote: »

Sound logic if the BoE's remit is to cause pain. It isn't.

How else does the Bank of England achieve behavioural change, if not by applying financial discomfort or pain?
For borrowers, interest rate hikes are not a carrot. They are a stick.

lisyloo

Perhaps. But over-indebted companies and individuals will feel the pressure, and may not be able to stay afloat. That is part and parcel of capitalism.

Businesses and individuals go bust for all sorts of reasons.


Department stores are finding their appeal outdated.
Some high st stores are facing competition from on-line retailers.
Farmers are struggling as they have no grass because of the weather.
Restaurant chains due to rising employment costs/competition.
Companies that haven't updated their appeal (toysrus) go bust.



You seem to be making a big deal out of a 0.25% interest rate rise.
It has not been done as a punishment and is ineffective in changing behaviour as decisions on debts have often already been made.


The 0.25% is not a big deal when one considers brexit uncertainty, rising minimum wage, rising pension contributions, rising workplace obligations, falling pound, higher import costs, weather issues (whether big freeze or heatwave).


There may be a handful for whom this is the last straw that breaks the camels back, but it's not big news as there are multiple pressures on business may of which are much more significant than 0.25%.

lisyloo

ilovehouses wrote: »

I can't imagine many Londoners are holding the back of their hands to their foreheads because of the potential they'll have to pick up a sandwich from WH Smith instead of Pret.

I'm really relieved you didn't tell me I'm going to have to make my own sandwiches :T

System

ilovehouses wrote: »

I can't imagine many Londoners are holding the back of their hands to their foreheads because of the potential they'll have to pick up a sandwich from WH Smith instead of Pret.

It depends how indebted the company that employs them is.

System

lisyloo wrote: »

Businesses and individuals go bust for all sorts of reasons.


Department stores are finding their appeal outdated.
Some high st stores are facing competition from on-line retailers.
Farmers are struggling as they have no grass because of the weather.
Restaurant chains due to rising employment costs/competition.
Companies that haven't updated their appeal (toysrus) go bust.

You seem to be making a big deal out of a 0.25% interest rate rise.
It has not been done as a punishment and is ineffective in changing behaviour as decisions on debts have often already been made.


The 0.25% is not a big deal when one considers brexit uncertainty, rising minimum wage, rising pension contributions, rising workplace obligations, falling pound, higher import costs, weather issues (whether big freeze or heatwave).


There may be a handful for whom this is the last straw that breaks the camels back, but it's not big news as there are multiple pressures on business may of which are much more significant than 0.25%.

If individuals and companies cannot feel the increases, the BoE will keep on hiking rates until they do feel them.