Inflation higher than expected yet again

hallmark

CPI is over 300% of the BOE's target since Feb 2022 but they're not fussed. Froze interest rates last month and will almost certainly do the same in November.   Why worry about doing your job when you get paid anyway.

metrobus

They have been determined to weaken sterling since Carney took over and Bailey is doing exactly the same.
The whole reason we are in this mess is because they were determined not to increase rates until it was far too late.
They are in the pockets of their banker mates , who’ve made Billions through virtual zero interest rates.

PixelPound

hallmark said:

CPI is over 300% of the BOE's target since Feb 2022 but they're not fussed. Froze interest rates last month and will almost certainly do the same in November.   Why worry about doing your job when you get paid anyway.

So are you more concerned at the inflation rate, or that BoE interest rate isn't going up so there won't be better rates out there?

BoE interest rate is over 1000% compared to Feb 2022, or increased by 950% since then. You can easy make percentages seem big. It's known that because of fixed rate mortgages and the number of people who have a mortgage that it takes a while for BoE rises to bite - so the trend in inflation rates means they are giving pause for the plethora of rate rises to take effect.

Ed-1

There will be a big drop next month as last year's energy price cap rise (albeit to £2,500 typical use, not the £3,500 it could've been) compares to this year's fall.

MattMattMattUK

hallmark said:

CPI is over 300% of the BOE's target since Feb 2022 but they're not fussed. 

They are fussed, but they only have a hammer, so everything is a nail. If they raised interest rates to a level required to bring inflation down to 2% already they would have tanked the economy and plunged the UK into a deep and incredibly damaging recession. 

hallmark said:

Froze interest rates last month and will almost certainly do the same in November. 

I suspect we might see a rise in November, but regardless, freezing interest rates last month was the right thing to do, indeed 5% was probably enough. There is a lag in interest rates feeding through to the market due the majority of lending being on fixed rates, be that mortgages or corporate borrowing. Around half of mortgages are still on pre-rise rates, but that will drop to 15% by the end of next year, the rates do not need to continue to rise because the impact of the rises we have already had will continue to grow.

hallmark said:

Why worry about doing your job when you get paid anyway.

I would say it is more important to do your job properly, which for BoE involves evaluating the impact that their decisions have on the wider economy and not just blindly focusing on inflation to the detriment of everything else, as you seem to want them to do. 

hallmark

nic_c said:

hallmark said:

CPI is over 300% of the BOE's target since Feb 2022 but they're not fussed. Froze interest rates last month and will almost certainly do the same in November.   Why worry about doing your job when you get paid anyway.

So are you more concerned at the inflation rate, or that BoE interest rate isn't going up so there won't be better rates out there?

BoE interest rate is over 1000% compared to Feb 2022, or increased by 950% since then. You can easy make percentages seem big. It's known that because of fixed rate mortgages and the number of people who have a mortgage that it takes a while for BoE rises to bite - so the trend in inflation rates means they are giving pause for the plethora of rate rises to take effect.

Inflation.   Savings rates don't bother me (mostly locked up or invested in other things anyway but I don't especially fret over a slightly better savings rate, inflation is the threat)

Sg28

I expect we will see 25bp rise in November befpre holding again in Dec. The boe wont want to rise rates in December pre christmas when retailers will be counting on the spending.

searching4bestrates

MattMattMattUK said:

hallmark said:

CPI is over 300% of the BOE's target since Feb 2022 but they're not fussed. 

They are fussed, but they only have a hammer, so everything is a nail. If they raised interest rates to a level required to bring inflation down to 2% already they would have tanked the economy and plunged the UK into a deep and incredibly damaging recession. 

hallmark said:

Froze interest rates last month and will almost certainly do the same in November. 

I suspect we might see a rise in November, but regardless, freezing interest rates last month was the right thing to do, indeed 5% was probably enough. There is a lag in interest rates feeding through to the market due the majority of lending being on fixed rates, be that mortgages or corporate borrowing. Around half of mortgages are still on pre-rise rates, but that will drop to 15% by the end of next year, the rates do not need to continue to rise because the impact of the rises we have already had will continue to grow.

hallmark said:

Why worry about doing your job when you get paid anyway.

I would say it is more important to do your job properly, which for BoE involves evaluating the impact that their decisions have on the wider economy and not just blindly focusing on inflation to the detriment of everything else, as you seem to want them to do. 

I agree with what you're saying, but I had thought the very purpose of making the BoE independent in the late 1990s was that their sole remit is to set monetary policy to achieve the Government's target of keeping inflation at 2%, and that the wider impact of such monetary policy was an issue for the Government of the day (and nothing to do with the BoE)?

Happy to be educated on this!

hallmark

MattMattMattUK said:

hallmark said:

CPI is over 300% of the BOE's target since Feb 2022 but they're not fussed. 

They are fussed, but they only have a hammer, so everything is a nail. If they raised interest rates to a level required to bring inflation down to 2% already they would have tanked the economy and plunged the UK into a deep and incredibly damaging recession. 

That argument gets used a fair bit.  I remember exactly the same thing being said if the Fed raised rates to levels far lower than they actually have but still no signs of recession across the pond.  IIRC Brexit was also guaranteed to cause a recession that hasn't happened.

I would argue that when the MPC lower IRs to almost zero and endlessly print money it overheats the economy and plunges the UK into a huge and damaging inflationary spiral.  But the MPC have no problem whatsoever doing that.

To clarify, I'm not saying that if the MPC raised IRs there's no chance of recession.  I'm saying it's a risk they should be taking since their remit is to keep inflation to 2% and they've failed by a huge margin for far too long.  But the MPC only ever take risks that might cause inflation and only ever heed risks that might cause recession.

Which is a large factor in the inflation disaster we've had for the last two years.

Swipe

Sg28 said:

I expect we will see 25bp rise in November befpre holding again in Dec. The boe wont want to rise rates in December pre christmas when retailers will be counting on the spending.

I'd be very surprised to see anymore rate rises unless the US hikes again or inflation goes back above 8%

metrobus

searching4bestrates said:

MattMattMattUK said:

hallmark said:

CPI is over 300% of the BOE's target since Feb 2022 but they're not fussed. 

They are fussed, but they only have a hammer, so everything is a nail. If they raised interest rates to a level required to bring inflation down to 2% already they would have tanked the economy and plunged the UK into a deep and incredibly damaging recession. 

hallmark said:

Froze interest rates last month and will almost certainly do the same in November. 

I suspect we might see a rise in November, but regardless, freezing interest rates last month was the right thing to do, indeed 5% was probably enough. There is a lag in interest rates feeding through to the market due the majority of lending being on fixed rates, be that mortgages or corporate borrowing. Around half of mortgages are still on pre-rise rates, but that will drop to 15% by the end of next year, the rates do not need to continue to rise because the impact of the rises we have already had will continue to grow.

hallmark said:

Why worry about doing your job when you get paid anyway.

I would say it is more important to do your job properly, which for BoE involves evaluating the impact that their decisions have on the wider economy and not just blindly focusing on inflation to the detriment of everything else, as you seem to want them to do. 

I agree with what you're saying, but I had thought the very purpose of making the BoE independent in the late 1990s was that their sole remit is to set monetary policy to achieve the Government's target of keeping inflation at 2%, and that the wider impact of such monetary policy was an issue for the Government of the day (and nothing to do with the BoE)?

Happy to be educated on this!

That was my understanding also, obviously their remit has changed without anyone being told.