Can anyone translate this?

Krakkkers

https://twitter.com/Peston/status/1567516606183473153

MattMattMattUK

The new chancellor is going to break current government rules about maximum borrowing will borrow more money (the £120-150+ billion required for the energy scheme. The BoE will increase interest rates, the previous estimates were that they would be 2.5-3% by the end of next year, however there is already talk that the next rate rise may be by 0.75%, so bringing them to 2.5% this year and next year could be 3-7%. 

mmmmikey

If people have more money in their pockets, they go out and spend more, and that can lead to inflation. The Bank of England tackles inflation by taking money out of peoples pockets by rising interest rates. So what Robert Peston and the guvnor are saying is that an effect of the energy price cap is that the BofE will have to put up interest rates more than they would otherwise have done to keep a check on inflation.

NB this is what they are saying - that's not to suggest everyone would agree with them.

[Deleted User]

Fiscal loosening just means that the government are going to spend more.

To avoid increasing inflation, it needs to be combined with monetary tightening - a.k.a. raising interest rates.

What_time_is_it

Pensioners will be delighted.
Younger people, less so.

MattMattMattUK

What_time_is_it said:

Pensioners will be delighted.
Younger people, less so.

Anyone with a mortgage less so, because for all but a few their fix will end before rates drop, people with savings will be quite happy. 

FreeBear

MattMattMattUK said:

What_time_is_it said:

Pensioners will be delighted.
Younger people, less so.

  people with savings will be quite happy. 

Even so, the return on savings will still be trifling. I would be happier to see it above 10%.

What_time_is_it

FreeBear said:

MattMattMattUK said:

What_time_is_it said:

Pensioners will be delighted.
Younger people, less so.

  people with savings will be quite happy. 

Even so, the return on savings will still be trifling. I would be happier to see it above 10%.

10% interest rates would be crippling for most mortgage holders and would further price out the young.

facade

I looked this up, as raising interest rates seems to make no sense.

If inflation is caused by the peasants having easy access to borrowed money and buying loads of stuff, creating shortages and increasing prices, then by raising interest rates the peasants can't afford to borrow as much, so they put off buying the new Audi.

(This can be bad in the long term though, as the Audi dealers will go bust)

On the other hand, if inflation is being caused by the peasants demanding pay rises so that they can afford to buy food, which if their benevolent employers grant them cause the prices of whatever it is the peasants toil to make to rise, then it won't work as the same peasants will now demand even higher wages to not only be able to afford to eat, but also to be able to afford the increased mortgage payments on their homes, which will make prices higher, so the peasants want more money....

MattMattMattUK

FreeBear said:

MattMattMattUK said:

What_time_is_it said:

Pensioners will be delighted.
Younger people, less so.

  people with savings will be quite happy. 

Even so, the return on savings will still be trifling. I would be happier to see it above 10%.

If interest rates hit 10% then we will be into a 4-5 year recession so if things head that way the BoE's mandate will need to be changed to stop them raising interest rates.