Inflation higher than expected yet again

Prism

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!

This is from their website.

We have specific statutory responsibilities for setting policy – for interest rates, for financial stability, and for the regulation of banks and insurance companies.

Inflation is just one part of it.

arnoldy

Time to stop the endless bungs that the Government seem to dish out. All they do is encourage a spending spree/inflation with much ending up with online retailers etc. Higher interest rates and hack back at Government spending please - a short term shock, rather than this endless farce of interest rates rising and the Government handing out bungs to offset the interest rate rise.

PixelPound

hallmark said:

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)

But inflation has been falling, hence why the pause on rate rises. The problem was they let inflation rise too much before they started rising rates, and if they'd have started earlier we probably wouldn't have got to here. 

It's going to be a long while before we get inflation to the BoE target - too aggressive and they risk tanking the whole economy. The plan I believe is slowly lowering it. If you look at history any inflation peak has usually taken a couple of years to get back to normal levels, why should this time be any different

PixelPound

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.

Possibly, especially as the fall has stopped. Another rise to ensure it starts falling again. Though I suspect some of the committee will not want a rise until after Christmas.

Ed-1 said:

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.

Maybe enough for the committee to pause again and wait until the new year before deciding on any changes.

GeoffTF

metrobus said:

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.

No. The government changed the rules. They now have to take economic growth into account.

metrobus

GeoffTF said:

metrobus said:

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.

No. The government changed the rules. They now have to take economic growth into account.

Link please

GeoffTF

metrobus said:

GeoffTF said:

metrobus said:

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.

No. The government changed the rules. They now have to take economic growth into account.

Link please

https://www.bankofengland.co.uk/monetary-policy

VNX

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.

Inflation was 6.7% in September but was expected to be 6.6% put the panic button away 

Cus

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.

They did great last month, bringing down inflation by 3 times more than expected by the market, so allowed a month off.

Nebulous2

Food and most inflation still going down, but a short-term blip due to a rise in fuel prices. 

It's an ill-wind however, as the saying goes, most public sector pensions will go up with September's CPI next April.