Rate predictions 2022, 2023

jimexbox

We've had base rates so low, for so long, its lulled a lot of folk into a false sense of security. When I got my first mortgage I actually considered seriously, what if rates doubled? Which were already more than double what they are now.

Unfortunately I can see repossessions becoming far more prevalent. 

The_Green_Hornet

2010 said:

TonyTeacake said:

By the end of 2023 interest rates will be between 7-10%. Even if we have a really bad recession which I think we will, high inflation is going to be still here.

They should be at that now.
Andrew Bailey asleep at the wheel, Boris Johnson not even in the car.
Truss, Sunak taking their driving test.
What a shower.

And Starmer, Davey and Sturgeon as the back-seat drivers....

ABFG

It's all about energy. The predicted temporary inflation was for the release of pent up COVID demand - but then we had the energy market starting to rocket just before the Ukraine conflict which poured removed fuel from the fire*. Inflation will only come down significantly when energy prices reduce significantly - or if the high prices force businesses whose output is non-discretionary spend bust and too many people lose their jobs at these companies.

Ultimately while tinkering with interest rates could have reduced the predicted COVID spike, it will have done very little to reduce non-discretionary spend, which are the things impacted by energy: food, heating, hot water, everything that gets made. Far better to hold or limit interest rate rises and use the differential saved on the debt to build new nuclear/wind/solar power. Reason being, increasing interest rates will have a limited effect on energy driven inflation. 

Responsibility for this lies mostly with politicians who saw gas as being permanently cheap and allowed other clean generation like I mentioned to be underinvested. Given what's been pumped into the economy since 2008 it's crazy behaviour, but it's also the increasingly populist and short sighted behaviour one expects from a 5 yearly election cycle.

solidpro

ABFG said:

Inflation will only come down significantly when energy prices reduce significantly 

How can they come down when the £ has lost nearly 20% of it's energy spending power over the last 7 years of government ineptitude? 2016 £1=$1.50. Today £1 = $1.20. Do you see this ever getting better?

Nothing to do with Ukraine. Everything comes back to one simple suggestion: Don't vote Tory.

TonyTeacake

solidpro said:

ABFG said:

Inflation will only come down significantly when energy prices reduce significantly 

How can they come down when the £ has lost nearly 20% of it's energy spending power over the last 7 years of government ineptitude? 2016 £1=$1.50. Today £1 = $1.20. Do you see this ever getting better?

Nothing to do with Ukraine. Everything comes back to one simple suggestion: Don't vote Tory.

Yes I totally agree, the pound is getting weaker and this raises the cost of imports.

TonyTeacake

Prism said:

TonyTeacake said:

Alistair31 said:

TonyTeacake said:

By the end of 2023 interest rates will be between 7-10%. Even if we have a really bad recession which I think we will, high inflation is going to be still here.

Are you taking bets on that?

Yes I am. I said at the beginning of the year inflation will get totally out of control and rates will go up, most people disagreed and said no way, just look how it has all changed.

I believe this rampant inflation is only just getting started and will be with us for most of this decade.

For that to happen wages will need to go up by a similar amount. Do you think that will happen? So far it seems the only way to achieve an inflation meeting wage increase is to change job.

For most people wages will certainly not keep up with inflation, especially with most people cutting back on discretionary spending which affects businesses right throughout the board. I am certain we will see many interest rate hikes over the next 18 months. A lot of people keep blaming Putin for this inflation, people need to do their homework and see that a lot of inflation was caused by stimulating the economy by sending the money printers into overdrive during the pandemic.
A lot of this money needs to be extracted from the economy by raising interest rates, Putin's war has only exacerbated the inflation problem making it much worse.

ABFG

solidpro said:

ABFG said:

Inflation will only come down significantly when energy prices reduce significantly 

How can they come down when the £ has lost nearly 20% of it's energy spending power over the last 7 years of government ineptitude? 2016 £1=$1.50. Today £1 = $1.20. Do you see this ever getting better?

Nothing to do with Ukraine. Everything comes back to one simple suggestion: Don't vote Tory.

Indeed - the loss of value in the pound hurts imports, gas being a key one. But that is only a part of the energy cost inflation.

better energy policy over the last few years could have completely obviated the problem.

Prism

ABFG said:

solidpro said:

ABFG said:

Inflation will only come down significantly when energy prices reduce significantly 

How can they come down when the £ has lost nearly 20% of it's energy spending power over the last 7 years of government ineptitude? 2016 £1=$1.50. Today £1 = $1.20. Do you see this ever getting better?

Nothing to do with Ukraine. Everything comes back to one simple suggestion: Don't vote Tory.

Indeed - the loss of value in the pound hurts imports, gas being a key one. But that is only a part of the energy cost inflation.

better energy policy over the last few years could have completely obviated the problem.

Although it appears that we buy most of our gas from Norway and other areas of Europe, and pound has barely moved against the Euro and Krone. Unlike oil, gas does not have a global price or currency.

Millyonare

The 10% UK inflation reading today was only very slightly above consensus expectations of 9-10%. Inflation is not wildly off-track.

sevenhills

The cost of products as they leave factory gates climbed by 17.1 per cent in the year to July 2022 – the highest the rate has been since August 1977 – and up from 16.4 per cent in the 12-months to June 2022, the Office for National Statistics revealed today.
How can there be such a large difference between CPI inflation and factory gate prices, CPI does not include housing costs.