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Original poster

Interest rates in the 1980s

4 replies

RosieLeaLovesTea · 07/02/2022 22:56

Hi all
Can anyone explain to me why the interest rates went up so high in the1980s? I was reading on the Bank of England website that they need to increase interest rates a bit to control inflation but that they won’t go up as high as 1980s. How can they control this?

OP posts:

DerAlteMann · 07/02/2022 23:10

Part of the problem was the government of the day printed money. Literally.

radioactive4 · 07/02/2022 23:14

Because inflation was so high and they needed to cool the economy.

BasementIdeas · 07/02/2022 23:22

They were also trying to stay within the boundaries of the European Exchange Rate Mechanism

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MintJulia · 07/02/2022 23:57

The day John Major pulled us out of the Exchange rate mechanism, the pound had come under attack by currency speculators. They put the interest rates up 5% in one day. that's 20x as much as the rate rise last weekend.

I was on my second mortgage payment, having saved for years to get to that point. I was in tears. I thought I'd lost everything. People were stunned. Then the govt changed tack, pulled us out of the ERM, and reduced the rate the following day.

I've never overstretched on a mortgage again

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