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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:
onlychildhamster · 04/02/2022 17:48

@MarshaBradyo www.google.com/amp/s/www.spectator.co.uk/article/don-t-mention-house-prices-to-the-japanese/amp

Short summary. It was horrific. Tokyo apartment prices have only recently recovered. Some people will say that the housing market in Japan is very different- cultural preference for new builds so older flats do not sell well at all but I don't see why it can't happen here.

CandyLeBonBon · 04/02/2022 17:49

@AnyFucker

Am mightily sick of these highly privileged fuckers telling the plebs how to suck up the shit

Try it yourself, Pal

That's pretty much word for word how I phrased it. It's all a bit 'let them eat cake!' Isn't it?
forinborin · 04/02/2022 17:53

@bindud

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.
... and that was mainly in the context of higher gas prices which were thought to be temporary. But now they seem to look more and more as a political rather an economic issue, don't you think?
LakieLady · 04/02/2022 17:58

How the fuck does he think people on low incomes, but above minimum wage, are going to manage when the price of energy, food and the interest on their mortgages are all rising?

I'd like to ask him what he thinks they should do: starve, freeze, or wait for the banks to reposess their homes?

bindud · 04/02/2022 18:04

@forinborin as I said I think they underestimated inflation & whilst QE was necessary at the start of the pandemic I don't think they should have continued with it & interest rates should have increased earlier. As I said you can disagree with me.

BoredZelda · 04/02/2022 18:06

But that is basic economics. Its not surprising but it is painful.

Yeah, but probably more painful coming from someone who earned more than half a million quid last year. And who will still get his bonus this year.

Mynameisnew · 04/02/2022 18:06

The massive wage disparity I just don't understand. Half a million quid? Why?!

woodhill · 04/02/2022 18:11

@InnaSpace

I might be more inclined to listen to someone who hasn't spent the last decade and a half merrily printing money while keeping interest rates at rock bottom, thus creating an asset owning class whose riches outstrip even high earners by a factor of thousands, while regular employees' wages have been frozen "because austerity".
Yes the rates have been too low, it may have held down house prices a bit as well to help FTB etc
forinborin · 04/02/2022 18:15

[quote bindud]@forinborin as I said I think they underestimated inflation & whilst QE was necessary at the start of the pandemic I don't think they should have continued with it & interest rates should have increased earlier. As I said you can disagree with me. [/quote]
QE has been in place for more than a decade, there's nothing new in it.

Last QE tranche was in Nov '20, and inflation stayed below the 2% target until Apr 21. When do you think they should have stopped the repurchase and increase the interest rates?

Changedmane · 04/02/2022 18:19

ECB is still insisting the inflation is temporary and not looking at interest rate rises though, so it’s not just the UK.

Florenz · 04/02/2022 18:23

The Bank of England has been poorly run for years, which is why people are investing in crypto currency and NFTs instead of placing their trust in pounds sterling that will only fall in value as long as Andrew Bailey is running things.

bindud · 04/02/2022 18:34

QE has been in place for more than a decade, there's nothing new in it.

who said otherwise? My point was I think it should be as a temporary tool. I think it's wrong that QE is the default solution to any worry.

When do you think they should have stopped the repurchase and increase the interest rates?

I don't feel like I have enough information to give a date re the QE. That was one of the criticisms directed at the BOE from the Lords report, I'm not sure why you think I have access to the info 😆

"The Bank does not publish sufficient information on QE for the public and Parliament to hold it to account for its decisions. It must be more open about its "assessment processes" for calculating how much QE is necessary to meet its objectives and break down the effect of QE at each stage of the programme in order to show whether it achieved the Bank's stated targets."

The report also highlighted the risk of inflation.

I'm also doubtful re their plan to wean us off QE & how straightforward it will be.

bindud · 04/02/2022 18:37

@forinborin why are you so confident in the BOEs strategy?

bindud · 04/02/2022 18:43

I think they could have raised rates in Nov, especially as there were indications they would. 4 of them wanted to rise it to 0.75% which would have been quite a jump.

I'm not confident they are going to get a handle on inflation either.

bindud · 04/02/2022 18:45

I'm certainly not an outlier in finding the BOEs decisions questionable looking at all the press & even no 10 has disagreed with the pay restraint point so as I said dreadful PR.

ButtockUp · 04/02/2022 18:55

Economically, a rise in interest rates, whilst shit for us plebs, actually encourages more foreign investment which then floods the economy.
( Economics is such a fascinating subject!)

A rise in the base rate needs to be met with a cautious approach but it also encourages savings which has remained stagnant for a long time. If more people are encouraged to save then these savings are then turned into further investment.

forinborin · 04/02/2022 18:56

[quote bindud]@forinborin why are you so confident in the BOEs strategy? [/quote]
Ah, I am glad I sound confident! I am actually not. They are handling an almost impossible task now. Let me be more specific - I am glad they actually have a strategy.
I personally think that increasing interest rates to the level now where they would actually offset the expected inflation to keep things "as before" would be a disaster. What do we expect now, 7% annual inflation? Then we should be looking roughly at the interest rate of between 5% and 10% just in order to keep real interest rates hovering around zero, as they are now.

MarshaBradyo · 04/02/2022 18:57

@Florenz

The Bank of England has been poorly run for years, which is why people are investing in crypto currency and NFTs instead of placing their trust in pounds sterling that will only fall in value as long as Andrew Bailey is running things.
Is this more prevalent here? Or more worldwide trend

Thanks for info re Japan Forin and Hamster

forinborin · 04/02/2022 18:57

@bindud

I'm certainly not an outlier in finding the BOEs decisions questionable looking at all the press & even no 10 has disagreed with the pay restraint point so as I said dreadful PR.
If you had to choose between Boris Johnson and Andrew Bailey to trust on the matter of economics, who would you pick? Grin
Alexandra2001 · 04/02/2022 19:00

@forinborin

He's right though, irrespective of how much he earns. And his salary is (a) a drop in the ocean of the British economy (b) he's actually worth it, compared to many, many other people in positions of power.
If he was worth it, he wouldn't have said it, all he's done is piss off an awful lot of people and probably achieve the opposite to what he wants.

Can't really imagine Carney saying similar.

forinborin · 04/02/2022 19:00

Economically, a rise in interest rates, whilst shit for us plebs, actually encourages more foreign investment which then floods the economy.
True about the foreign investment, unless of course you also have that gift that keeps on giving, that wonder that keeps on reassuring foreign investors, that is Brexit.

bindud · 04/02/2022 19:15

If you had to choose between Boris Johnson and Andrew Bailey to trust on the matter of economics, who would you pick?

It's awful optics when Bojo who is having a not particularly good week (understatement) can criticise you & deflect attention away from himself. I presumed AB would have had more media savvy.

MarshaBradyo · 04/02/2022 19:18

It has pissed people off re PR it’s not great

But are people saying it shouldn’t happen or that it shouldn’t be broadcast?

If the latter what’s a better way.. and in any case it’s going to hurt still even if more nuanced

HollyRD · 04/02/2022 19:20

I though a be fit of Brexit was that wages would go up.....

forinborin · 04/02/2022 19:28

@bindud

If you had to choose between Boris Johnson and Andrew Bailey to trust on the matter of economics, who would you pick?

It's awful optics when Bojo who is having a not particularly good week (understatement) can criticise you & deflect attention away from himself. I presumed AB would have had more media savvy.

I agree, it was quite miscalculated from the PR perspective (but, also look at the original comments verbatim - journalists did sensationalise them, it was not delivered in the 'let them eat cake' spirit at all).

It still does not mean that it is wrong.

I personally appreciated honesty from a public figure for a change, even if it sounded brutal. Comparing to the usual politicians' bluff and "we're in this together", or what was the exact phrasing recently.