Interest rate rise?

Thrugelmir

Jack_Johnson_the_acorn wrote: »

A bank building society doesn't have to act on the BOE base rate rise.

Banks and Building Societies need to source retail deposits to underpin their capital base. Not being competitive is akin to commercial suicide. The days of Central Bank support are over. Banks are going to have to change policy.

Thrugelmir

lisyloo wrote: »

But if I were to lose mine I’d much rather lose it at a time of low unemployment when my prospects were good rather than in a recession.

High employment currently hides a multitude of over factors. Your employment prospects will change over time.

buglawton

Trying to control inflation via interest rates is so ironic. Its the BoEs policies that unleashed a massive wall of QE cash into the economy. Thats what causes inflation (most of QE went into property price inflation).

By not printing virtual money, ever, inflation would be magnificently controlled with interest rates tending towards zero.

And guess what, despite the much trumpeted unwinding of QE, recent statements say that the option of further QE is being held open.

If only Carney would be honest with the British public.

lisyloo

Jack_Johnson_the_acorn wrote: »

A bank building society doesn't have to act on the BOE base rate rise.

Surely in some cases they do i.e. where the contract says they will.

System

buglawton wrote: »

Trying to control inflation via interest rates is so ironic. Its the BoEs policies that unleashed a massive wall of QE cash into the economy. Thats what causes inflation (most of QE went into property price inflation).

By not printing virtual money, ever, inflation would be magnificently controlled with interest rates tending towards zero.

And guess what, despite the much trumpeted unwinding of QE, recent statements say that the option of further QE is being held open.

If only Carney would be honest with the British public.

I have read in various places that the days of the old-style QE are over (too many adverse side effects, and diminishing effectiveness with repeated use). In future, if needed, the authorities will use *helicopter money* - injecting newly printed funds into tax cuts, infrastructure projects etc, to prevent it inflating the asset prices of the haves, at the expense of the have-nots. This would be via a new committee, a *fiscal-montetary policy committee* FMPC. It sounds like *helicopter money* will not cause asset price inflation, and could even lead to higher interest rates (through fiscal loosening).

lisyloo

Thrugelmir wrote: »

High employment currently hides a multitude of over factors. Your employment prospects will change over time.

Yes agreed.


I just don't see 0.25 as significant in causing liquidations/bankrupcies in significant numbers when we've had quite a few companies going into liquidation recently for a variety of other reasons.


A few and maybe a few personal tragedies but do you see anythng more significant than that?

System

lisyloo wrote: »

Yes agreed.


I just don't see 0.25 as significant in causing liquidations/bankrupcies in significant numbers when we've had quite a few companies going into liquidation recently for a variety of other reasons.


A few and maybe a few personal tragedies but do you see anythng more significant than that?

Those 'other reasons' are invariably debt-related. The common denominator with all the companies that have gone bankrupt was their huge and unaffordable debt burdens, Carillion for instance, even with rock bottom interest rates. A 0.25% rise will only add pressure on other companies that are struggling with debt.

lisyloo

Those 'other reasons' are invariably all debt-related.

I disagree and have already given many examples.


Farmers sending animals to slaughter as they have run out of grass due to the heatwave is not debt related.
Restaurants have cited - competition, increasing min wage, imcreasing export costs.
Many physical retail outlets have cited competition with on-line retailers.


How do you think the 0.25% interest rate rise will affect private companies with private investment?
How do you think the 0.25% interest rate rise will affect US employers?
i.e. won't affecct everyone that's indebted as you appear to be saying.

System

lisyloo wrote: »

I disagree and have already given many examples.


Farmers sending animals to slaughter as they have run out of grass due to the heatwave is not debt related.
Restaurants have cited - competition, increasing min wage, imcreasing export costs.
Many physical retail outlets have cited competition with on-line retailers.


How do you think the 0.25% interest rate rise will affect private companies with private investment?
How do you think the 0.25% interest rate rise will affect US employers?
i.e. won't affecct everyone that's indebted as you appear to be saying.

I don't know about farmers in the heatwave, but restaurant chains like Goucho and Prezzo that have gone under were owned by venture capital, which piled them high with debt. Carillion also had huge unserviceable debts.

lisyloo

Ozymandias73 wrote: »

I don't know about farmers in the heatwave, but restaurant chains like Goucho and Prezzo that have gone under were owned by venture capital, which piled them high with debt. Carillion also had huge unserviceable debts.

Farmers have run out of (free) grass due to fields being scorched and are now having to buy feed for their animals. In some cases they are having to slaughter animals where it's not economically viable to keep them alive. These are not all animals that were destined for slaughter e.g. some were milking cows.


Please tell us how you think money invested by venture capitalists is related to the BOE base rate.


Debt is one fact but the independent mentions wages, rent, competition, squeezed consumer spending.


Deloitte say (in relation to Gaucho) - over supply, rapid exapnsion, poor site selection, onerous lease arrangements and fundamentally poor guest proposition.



Altus group cited - rents, extra tax for business rates, rising food prices, staff costs, rising minimum wage.


Jamie oliver balmes brexit and touch trading conditions
https://www.express.co.uk/finance/city/751004/jamie-oliver-blames-brexit-for-six-Italian-restaurant-closures


Personally I think you are over-egging the risks of the rate rise which may be a tragedy for a few, but generally not without other issues as well. Companies with a good guest proposition can survive in competitive markets and high rent areas.