Are we expecting BOE to remain at 4.75% on 8th February 2025?

Sarah1Mitty2

RelievedSheff said:

I think with Hunt's green light earlier in the month to do whatever it takes to get inflation down, that the rate rise today will be 0.5%.

If they were serious it would be a full 1% and get the job done with but I don't think they have the balls to do that.

Good call. Financial media now talking about rates at 6.25% by December, can you see this happening?

propertyhunter

lojo1000 said:

propertyhunter said:

They don't know what they're doing because this is supply side inflation - caused partly by Brexit increasing our import costs and limiting our labour market, combined with the war in Ukraine and its effects. It's not being driven by demand side inflation caused by people spending too much. I don't know how people in this country get into high office. I fear it's cronyism and corruption rather than on merit. 

What are your practical supply side solutions and where would you put base rates now?

I think we have to relieve the labour market. It's too tight - not enough people to do essential jobs. So we relax our immigration policy - grant more visas. It allows us to be more productive. I think hold interest rates now they are where they are because their effects aren't filtering through yet - only a proportion of mortgage holders are affected so far since more people are on fixed rates. I dread to think what is going to happen in 2025-26 when most people are exposed to the current interest rates. 

snowqueen555

Damn, are mortgage rates going to go up or were they priced in? I'm pretty close to buying.

Sarah1Mitty2

propertyhunter said:

lojo1000 said:

propertyhunter said:

They don't know what they're doing because this is supply side inflation - caused partly by Brexit increasing our import costs and limiting our labour market, combined with the war in Ukraine and its effects. It's not being driven by demand side inflation caused by people spending too much. I don't know how people in this country get into high office. I fear it's cronyism and corruption rather than on merit. 

What are your practical supply side solutions and where would you put base rates now?

I think we have to relieve the labour market. It's too tight - not enough people to do essential jobs. So we relax our immigration policy - grant more visas. It allows us to be more productive. I think hold interest rates now they are where they are because their effects aren't filtering through yet - only a proportion of mortgage holders are affected so far since more people are on fixed rates. I dread to think what is going to happen in 2025-26 when most people are exposed to the current interest rates. 

Increase wages for essential jobs is the answer, not more immigration, IMO.

MattMattMattUK

lmitchell said:

lojo1000 said:

propertyhunter said:

They don't know what they're doing because this is supply side inflation - caused partly by Brexit increasing our import costs and limiting our labour market, combined with the war in Ukraine and its effects. It's not being driven by demand side inflation caused by people spending too much. I don't know how people in this country get into high office. I fear it's cronyism and corruption rather than on merit. 

What are your practical supply side solutions and where would you put base rates now?

Scrap VAT on energy.

Inflationary. Reduces costs slightly to consumers, not supply side.

lmitchell said:
Enforce lower standing charges.

No net change. Standing charges are already set by Ofgem, the suppliers make no profit from them and reducing standing charges means that unit rates need to rise.

lmitchell said:
Reduce fuel duty.

Inflationary. Would reduce costs to consumers and businesses, but the reduction in costs to consumers and subsequent increased spending would increase inflation more than the drop to business. 

lmitchell said:

Those three solutions alone would get us back down fast - and without rates having to go much higher than 3%.

Those three "solutions" would increase inflation, potentially significantly, as well as reducing government revenue at a time that deficit is rising and borrowing has reached the highest proportion of GDP for 60 years. They are not solutions, they are making things worse. 

lojo1000

lmitchell said:

lojo1000 said:

propertyhunter said:

They don't know what they're doing because this is supply side inflation - caused partly by Brexit increasing our import costs and limiting our labour market, combined with the war in Ukraine and its effects. It's not being driven by demand side inflation caused by people spending too much. I don't know how people in this country get into high office. I fear it's cronyism and corruption rather than on merit. 

What are your practical supply side solutions and where would you put base rates now?

Scrap VAT on energy. Enforce lower standing charges. Reduce fuel duty.

Those three solutions alone would get us back down fast - and without rates having to go much higher than 3%.

Agree with cutting taxes on energy - we don't know how much impact it would have - but cutting rates would simply increase demand.

snowqueen555

Sarah1Mitty2 said:

propertyhunter said:

lojo1000 said:

propertyhunter said:

They don't know what they're doing because this is supply side inflation - caused partly by Brexit increasing our import costs and limiting our labour market, combined with the war in Ukraine and its effects. It's not being driven by demand side inflation caused by people spending too much. I don't know how people in this country get into high office. I fear it's cronyism and corruption rather than on merit. 

What are your practical supply side solutions and where would you put base rates now?

I think we have to relieve the labour market. It's too tight - not enough people to do essential jobs. So we relax our immigration policy - grant more visas. It allows us to be more productive. I think hold interest rates now they are where they are because their effects aren't filtering through yet - only a proportion of mortgage holders are affected so far since more people are on fixed rates. I dread to think what is going to happen in 2025-26 when most people are exposed to the current interest rates. 

Increase wages for essential jobs is the answer, not more immigration, IMO.

I'd agree with that but the government don't want to increase wages, and unemployment is low right now. They need more workers to pay tax and national insurance. Not sure what the solution is, but every country is probably facing the same aging demographic issues.

lojo1000

propertyhunter said:

lojo1000 said:

propertyhunter said:

They don't know what they're doing because this is supply side inflation - caused partly by Brexit increasing our import costs and limiting our labour market, combined with the war in Ukraine and its effects. It's not being driven by demand side inflation caused by people spending too much. I don't know how people in this country get into high office. I fear it's cronyism and corruption rather than on merit. 

What are your practical supply side solutions and where would you put base rates now?

I think we have to relieve the labour market. It's too tight - not enough people to do essential jobs. So we relax our immigration policy - grant more visas. It allows us to be more productive. I think hold interest rates now they are where they are because their effects aren't filtering through yet - only a proportion of mortgage holders are affected so far since more people are on fixed rates. I dread to think what is going to happen in 2025-26 when most people are exposed to the current interest rates. 

Agree with expanding the labour market since labour is a resource - it does however need to be productive labour.

RelievedSheff

Sarah1Mitty2 said:

RelievedSheff said:

I think with Hunt's green light earlier in the month to do whatever it takes to get inflation down, that the rate rise today will be 0.5%.

If they were serious it would be a full 1% and get the job done with but I don't think they have the balls to do that.

Good call. Financial media now talking about rates at 6.25% by December, can you see this happening?

I certainly wouldn't be surprised at 6% by Christmas.

I guess a lot comes down to how far inflation drops by then.

lojo1000

MattMattMattUK said:

lmitchell said:

lojo1000 said:

propertyhunter said:

They don't know what they're doing because this is supply side inflation - caused partly by Brexit increasing our import costs and limiting our labour market, combined with the war in Ukraine and its effects. It's not being driven by demand side inflation caused by people spending too much. I don't know how people in this country get into high office. I fear it's cronyism and corruption rather than on merit. 

What are your practical supply side solutions and where would you put base rates now?

Scrap VAT on energy.

Inflationary. Reduces costs slightly to consumers, not supply side.

lmitchell said:
Enforce lower standing charges.

No net change. Standing charges are already set by Ofgem, the suppliers make no profit from them and reducing standing charges means that unit rates need to rise.

lmitchell said:
Reduce fuel duty.

Inflationary. Would reduce costs to consumers and businesses, but the reduction in costs to consumers and subsequent increased spending would increase inflation more than the drop to business. 

lmitchell said:

Those three solutions alone would get us back down fast - and without rates having to go much higher than 3%.

Those three "solutions" would increase inflation, potentially significantly, as well as reducing government revenue at a time that deficit is rising and borrowing has reached the highest proportion of GDP for 60 years. They are not solutions, they are making things worse. 

A lot of small businesses have suffered from rising energy costs. Reducing VAT here would keep many in business even if not increasing supply, so I think this is a good idea.

Similarly with fuel duty - it would reduce the cost to bring goods to market and hence encourage supply.

The revenue lost by the government would need to be financed which has negative impacts but on the whole I still think this direct approach to increasing supply works.

Just don't cut interest rates at the same time.