To not understand how raising the interest rate works?

[Charlavail]

Surely then people will just have even less money to spend and the economy won't improve?
Sorry for my naivety.

Ive been thinking the exact same thing, without tackling the route cause (largely energy) all rising interest rates will do is make people poorer with less disposable income to spend on the rising energy bills.

surely the only real solution is some sort of nationalised energy where pricing is controlled as this ‘price cap’ is a massive farce and Hunt as reneged on the maximum price guarantee

Actually we are just following the US. Their economy is a bit more overheated that ours. The joys of being a small island - high inflation, high taxes and high interest rates. It's also about Brexit making imports more expensive. We produce little but import a lot. A lot of chickens are coming home to roost.

USA economy doing well at the moment.

powell, the Fed chairman will only stop raising when employment starts to kick in.

yesterday they raised again and the market started going up.

so he immediately started talking about more raises.

interesr rates have been artificially low for too long.

you have The Fed to blame for this. Honestly think they are a bunch of incompetent fools. Unelected also the last time I checked.

they should have tightened much further back.

and yes whatever USA does we have to follow.

if we don’t raise, sterling will slide and our imports become very expensive. Not good for inflation either.

the difference is, usa was doing better anyway and they’ve no Brexit to cope with. So they can keep raising.

in the meantime, we’ll just get broken.

andrew Bailey is rubbish. He could have raised as well months ago.

so very very behind the curve. An absolute loser in my view. EU no better.

expect deep recessions this side of the Atlantic

sorry but it will get a lot worse before it gets better.

Higher interest rates mean people borrow less and spend less. So the economy slows down and companies can’t put their prices up so quickly.

What's the rationale behind companies putting their prices up, though? Is it a case of them greedily pushing their profits as high as they can get away with or is it them being forced to pass on their increased costs in order not to go under? I'm guessing a lot of it depends on business size, mind.

This!

The writing was on the wall two years ago the plan is was to inflate away the debt.

to put it simply, it's shearing season (for the overly indebted)

Unless BoE don't start explain the real reason why they don't have a choice to raise the rates, people won't get it. They won't get that we may end up with rates that aren't good for us but we have no choice but to have them. Even with Covid, we followed the Fed, i.e. no real choice

I think a big part of US doing well is their energy supply. Unlike eurozone. We’re going to be hurt by this war more (although not forgetting suffering for people in Ukraine atm)

If it ends and supply is resolved things might improve, although who knows when that would be even after it ends.

Exaclty people forget that the US is an energy exporter. Yes, it also imports oil but the high gaz prices have been good for business. Plus, military industrial complex is also doing well. Plus they have a greater pull to dictate the terms. The UK doesn't, it exports gaz but has no storage, it is managing Brexit....it's tough. Its a toxic combination of Brexit, Covid and Russia's war plus decades of austerity that has depleted much of the public sector. But if neither the government or the BoE are willing to tell it how it is, the public won't understand.

This is completely true they never let the market reset so now we will have lots of pain.

USA is not an energy exporter. there's a big shortage of diesel in the USA right now and they are digging into their strategic reserves like never before.

Only 28 days of diesel left in the USA.

Why does America have a diesel shortage?
High distallate (heating oil and diesel) demand amid low inventories.
Refinery maintenance- this happens in the spring and fall and means lower capacity.

Capacity has fallen in the past few years because several unprofitable refineries were closed.

The primary reason is the cutoff of Russian imports.

Prior to Russia's invasion of Ukraine, the US was importing nearly 700,000 barrels per day of petroleum and petroleum products.

Most of those imports were finished products and refinery inputs that boosted distillate supplies in the U.S.
Source: Forbes

There's a lot of posturing by Arab nations right now not doing what Biden wants.

It's getting hot out there and it'll be interesting to see how this pans out.

No more arms deals to Saudi perhaps? MBS is desperate to make his mark but Qatar and others equally unhappy with the USA.

Anyway, the situation goes way beyond what is going on in our little neck of the woods as we raise our interest rates a peasly little 0.75%.

I'm afraid we're small fry and USA determined to see the back of Russia, even if it means a recession here. And to be fair I don't mind - they had our backs in WW2 - eventually.

70% of the world lives under an autocracy. The democracies have to stick together. Or it's the end of places like Mumsnet etc.