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Original poster

Is the Bank of England for real here?

238 replies

TheWhalrus · 04/02/2022 12:29

So, just now the Bank of England announces that to combat inflation, employers should be looking to not increase staff salaries (www.theguardian.com/business/2022/feb/04/bank-of-england-boss-calls-for-wage-restraint-to-help-control-inflation). So at a time of massive inflation, we're apparently not supposed to be trying to earn more or aspiring for a higher salary in order to maintain our own living standards? Rather the Bank of England expects us to knuckle down and accept these circumstances because they can't control inflation.

Has this guy (annual salary £575,538) been smoking something? Or does he really have no grasp at all of reality?

OP posts:
forinborin · 04/02/2022 16:35

Trouble is, they know the other way to restrict inflation is to raise interest rates and they'd rather not do that because of the sh1tshow it could cause, so it's back to "suck it up, peasants"
Hmm, so the interest rates on peasants' mortgages going up to 7%-8%, and mass defaults on consumer loans is a better option?

MarshaBradyo · 04/02/2022 16:38

@forinborin

Trouble is, they know the other way to restrict inflation is to raise interest rates and they'd rather not do that because of the sh1tshow it could cause, so it's back to "suck it up, peasants" Hmm, so the interest rates on peasants' mortgages going up to 7%-8%, and mass defaults on consumer loans is a better option?
It doesn’t sound great to me either
Changedmane · 04/02/2022 16:40

There we go Grin

Is the Bank of England for real here?
Is the Bank of England for real here?
forinborin · 04/02/2022 16:41

@Changedmane

Forinborin I would argue 1) it feeds into the rich, white men telling poor people what sacrifices they will have to make whilst earning a fortune narrative (that is enraging the population- see Boris thread, or Sunak thread or antiwork on reddit) 2) on the worst possible day when people have been informed of price rises 3) in the worst possible way whilst being tone deaf to the fact that many haven’t had payrises thanks to austerity for years I don’t think the B of E intended offence to be fair. But, if people are clearly offended by this- that’s the time to apologise for offense caused. They aren’t annoyed at fiscal policy they are annoyed at the patronising, talking down tone- you greedy plebs better not ask for more- back to your workhouses while billions of money has been squandered. We don’t want to hear a very rich person tell us how greedy and grabby we are after we have suffered through austerity/covid/Brexit/ now the energy crisis. That is the message people have taken from this -whether it was intended or not-
My point is that the anger is completely mistargeted in this case. And the author of the comment is hardly very rich on par with Sunak etc - very well paid, yes, but still an employed worker.
Meandthesky · 04/02/2022 16:53

Well perhaps people on over £500k a year can afford for their normally massive pay rises not to keep pace with inflation but the majority of people can’t, especially those an already low incomes.

It’s implying it will be all our fault for asking for enough money to pay our bills and keep a roof over our heads. Rather than blaming the government and their rich mates

Puzzledandpissedoff · 04/02/2022 16:55

So the interest rates on peasants' mortgages going up to 7%-8%, and mass defaults on consumer loans is a better option?

Not really, no. A better option would be never to have propped up insanely expensive house prices in the first place, but it's a bit late for that now

It's just a pity some didnt think of the longer term consequences when they were shouting about "the market being RED HOT round here", but while I feel it for those who have no choice but to move house, it seems a bit silly to buy at near-zero interest rates and somehow hope that'll never change

bindud · 04/02/2022 16:56

Not really, no. A better option would be never to have propped up insanely expensive house prices in the first place, but it's a bit late for that now

yep

bindud · 04/02/2022 16:59

Cheap money has created a massive problem.

Exactly QE has created this mess

Gowithme · 04/02/2022 17:00

What a dick.

MarshaBradyo · 04/02/2022 17:02

@bindud

Cheap money has created a massive problem.

Exactly QE has created this mess

The pandemic has cost an absolute fortune - how would you deal with it if different to this?

Ie in terms of BoE actions

bindud · 04/02/2022 17:12

I don't think hirings at that level are decided via interviews.

Clearly I was being facetious!

The answer why I think he's worth his money is that I worked for many years in the industry that has been supervised by the PRA under his command (previous job), and I rate them very highly.

He was a favourite for the role because of the above but my comment was referring to past employment.

Regarding his new job, I have read through the economic affairs committee report and evidence presented to the house of lords in July 2021 (when it was obvious to everyone that high inflation times are knocking on the door), and the Bank of England has a very clear, rational and tangible position on the matter, despite being faced with very difficult circumstances.

Yes a difficult time to take on the role.
However in November the BOE gave the impression it would act in one way but didn't. Their growth forecasts have been consistently wrong & they have underestimated inflation. That is not a good performance in my book although you can disagree.

The comment about pay rises was a stupid thing to say as it's bad PR.

bindud · 04/02/2022 17:13

@MarshaBradyo

are you saying QE has not caused an issue with asset inflation? That was my point.

MarshaBradyo · 04/02/2022 17:19

[quote bindud]@MarshaBradyo

are you saying QE has not caused an issue with asset inflation? That was my point. [/quote]
Not really, just asking a direct question.

I think the economic shock of the pandemic has been huge but I wouldn’t know where to start in terms of managing that. So if people on thread have good ideas on how then I’m interested in hearing more.

bindud · 04/02/2022 17:21

@MarshaBradyo I also haven't said raising interest rates was wrong, I think they should have done it earlier personally. I think we will see another rate rise this year as I said earlier on the thread.

londonmummy1966 · 04/02/2022 17:25

I'd have more sympathy with the argument if similar curbs were put on other forms of income like dividends. I have to say that I 'd have liked to see some restrictions as a quid pro quo for the increase in the energy cap - perhaps no increase in board level pay and no directors' bonuses and no dividends for a period of time.

Tiredalwaystired · 04/02/2022 17:25

They’re just setting things up in readiness for when public sector workers dare to ask for a pay rise that actually makes a difference…

Phos · 04/02/2022 17:27

Do you actually understand economics OP?

bindud · 04/02/2022 17:27

The policy of relying to heavily on QE to stimulate growth is wrong & we have been too dependent on it. Look at the wage stagnation after 08, the low productivity, the austerity, the lack of investment, the widening wealth inequality despite all the money pumped into the system.

forinborin · 04/02/2022 17:31

The comment about pay rises was a stupid thing to say as it's bad PR.
This is fair, I agree.

forinborin · 04/02/2022 17:39

@bindud

The policy of relying to heavily on QE to stimulate growth is wrong & we have been too dependent on it. Look at the wage stagnation after 08, the low productivity, the austerity, the lack of investment, the widening wealth inequality despite all the money pumped into the system.
The alternative was what happened in Japan in the 90s. Also not pretty, and they would have been blamed for it too.
bindud · 04/02/2022 17:43

I don't think QE is wrong, I just think the BOE have leaned into it far too heavily & it's not been scrutinised enough.

MarshaBradyo · 04/02/2022 17:44

Forin what happened in Japan in 90s?

tkwal · 04/02/2022 17:46

So, electricity, gas, food and transport costs are all rising by the day but we are all supposed to just suck it up...oh and by the way they have increased base rates by more than 100% so mortgage payments will soon be heading the same way. The current property bubble will burst and we will see people trapped by negative equity again.?I foresee a lot of political polarisation, civil unrest and a succession of hung parliaments in our future

bindud · 04/02/2022 17:48

I think it's one reason the BOE missed their forecasts, they seemed to think higher prices were temporary last autumn which has not been the case hence why they are on the back foot. And I think they will continue to be on the back foot.

forinborin · 04/02/2022 17:48

@MarshaBradyo

Forin what happened in Japan in 90s?
This

en.wikipedia.org/wiki/Lost_Decades

(actually, it was longer than just 90's - I was quoting from my feeble memory).

Or, what happens when you run a tight monetary policy when your interest rates are already almost zero.

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