BoE announce interest rate rise

[Darkandstormynite]

Just seen BoE has confirmed interest rate to rise to 4.5%

AIBU to think we haven't reached the top yet and there's more to come?

The Tories. They are our unique event.

Im so sorry for you @Vomdotcom and @LaurieFairyCake.

Exactly, if you look at trend lines , the rot started before Truss. Inflation was starting to rocket well before she was made PM.

I find it interesting that a few on here are also adamant it’s all caused by lockdown. However, many major economies increased debt to lockdown and are outperforming us now. The only thing unique to the UK is Brexit.

We’ll never turn things around with Hunt as chancellor and Bailey as Bank of England governor. Both useless.

@TorviShieldMaiden for me there’s two ways of looking at it:

the 2 year fix is more risky hoping the rates will come down and you can go on a tracker or fix at the end.

a 5 year gives you stability with payments but the rates might decrease towards the end of your fix so you might feel more screwed over.

if money is tighter I would do 5 years, you know what your paying for 5 years regardless of the rates less stress and crack on

if money isn’t as tight and you want to gamble I would fix for 2 years and hope it comes down or stay equal rates

There’s no such thing as the cost of living crisis. That particular term is another one generated by the media in response to the levelling of true costs, to fuel frenzy, panic and general discontent. Nor are interest rates particularly high at the moment.

if you’re not satisfied with your wages, then just like everyone else you’re free to go off in search of an income you feel you deserve.

Our generation, just like all previous ones have had plenty of choices and still do. It’s about making the right choices instead of the wrong ones and then claiming to be a victim of just about everything reported in the media.

For me I need a good rate again in 2028 so hopefully time to overpay and get back down. I fixed at 1.95% and was annoyed as the 1.8% rate I'd had my eye on was pulled overnight. Very quickly I was glad and now the rate looks fab.

Yes you’re right, no such thing as it, energy prices are at an all time low too, inflation at 2%, no such thing as food inflation either… all fictitious.

it’s also incredibly easy to just ‘get another job’

thank you for your enlightened perspective

My lord, you really don't have much of a clue about economics do you?

Hint:

When nominal wages in the UK are growing at a rate much lower than inflation, we are all in fact poorer in the aggregate sense.

The people most exposed to this in the distributional sense are those with less bargaining power for their labour (lower skilled) combined with their personal inflation rate (based on what type of things they spend their income on like food, energy, fuel etc.).

The real threat to the UK is not higher interest rates, but the sky-high level of food inflation that we are seeing (19%).

Not only is it going to make large swathes of the population worse off, but it is also going to drive a wage-price spiral as people will absolutely demand higher wages if they cannot afford to put food on the table. This will them have the knock on effect of keeping inflation higher in the UK for longer.

This is total nonsense.

I am an Actuary and nobody is saying 4.5%

Absolutely nobody given the UK has import inflation as a driver of total inflation (we import things like food, energy, fuel which are priced in USD), and we are now seeing second round effects for core inflation (this are the initial stages of a wage-price spiral).

Market implied inflation is also pointing to about 5% by end of 2023.

We just locked in a fixed rate last week.

I think it is very much led by the US who are being aggressive with rate rises - though they have just had another bank go down - personally I think the US approach is part of it's face off against China but they are balancing that with the potential impact to banks

We need to remortgage soon and it’s looking like we need to find an extra £550 a month! We simply don’t have this sort of money as an extra so are looking likely we will need to downsize. But then we also don’t have estate agent/solicitors fees or stamp duty etc!

As well as the incompetent corrupt government not being able to do anything useful, they actively damaged the economy by printing half a trillion pounds to pay healthy people to be locked down

The rot set in from 08

the general consensus is that mid point next year inflation will be almost back to normal and it was start to come down tail end of this year

The BOE think they same but they initially thought inflation was a blip...

Historically (going back to 1975), interest rates are still low!

They are but because prices are so high today 5% has the same impact on disposable income as the double figs in the past.

Low interest rates aren't a good thing, it just meant higher house prices & wage stagnation plus lack of investment & development which is one reason our productivity is so low.

It can't because the economy is fucked.
pretty much plus the ageing population issue.

All those people who were given free money during covid should pay it back imo.

So people who weren't allowed to do their jobs that were supported to keep the individual & the wider business going should have to pay back "free money". 🙄

@hamustro I agree it's super shit for younger people & because of so much housing inequality the burden of high inflation isn't really been felt by all.

If someone sets up "home" in a property they don't own and have financed unrealistically cheaply for a limited period of time, and suddenly finds it unaffordable when the interest rates slowly start to head back towards normal sustainability then they're victims of nothing other than their own naivety, stupidity or compulsion to try and keep up with the Jones's.

What a load of crap. Many buyers just wanted to avoid the insecurity & higher costs of rent; nothing to do with keeping up with the Jones's. You are clearly very bitter about something...

if you’re not satisfied with your wages, then just like everyone else you’re free to go off in search of an income you feel you deserve.

Plenty of jobs have seen wage stagnation for years hence all the strikes...

These stupid millennials. Why did they buy houses when they should have bought garden sheds they could afford.

Exactly. NMW has caught up and overtaken a lot of public sector jobs and graduate trainee posts only pay a little more.

What I'm worried about is raising interest rates not actually curbing inflation because a lot of it is due to rises in food and utilities that people can't always significantly cut back on.

So 'higher prices reducing demand' not achieving anything except making people poorer.

So while some out of touch rich person has deemed that it is something we 'have to accept' the reality is going to be poverty, debt, loss of homes or, at best, a significant reduction in lifestyle spending for tens of millions of people, with knock on mass failures for many businesses providing non essential goods or services. This could take years for many to recover from.

The problem may not be the lockdown itself, but the particular way that lockdown was implemented and spending decision were made by those in power at the time, who seem to still be in power.
Buying PPE from the highest bidder because they are the mate of your pub landlord, not understaanding despite your hugely expensive education what numbers mean (who says private schools are all that?) and partying rather than getting on with the job.

Oh and don't mention eat out to spread covid.

The whole pandemic response was too expensive. Financial support was only meant to be 8 weeks initially but dragged on for over a year

No one wanted to hear about the expense though, too worried about Covid. Anything that helped businesses was scoffed at, oddly. Far too much focus on one side of what was happening.

Exactly, if you look at trend lines , the rot started before Truss. Inflation was starting to rocket well before she was made PM.

It was. We're not seriously blaming her for it surely? Inflation has been happening in other countries, including the US.

You want to pin it on anything, I'd start with the war in Ukraine which has pushed up food and energy prices.

Then the pandemic and the knock-on impact on demand and supply, plus the disruptions to supply chains.

Quantitive easing also doubled during the pandemic.

Doubtless COVID lock-downs damaged the economy and printing money for people to stay at home has fueled inflation. But COVID policy is just the fall guy for fifteen years of can kicking. The banks weren't "sorted out" in 2008/09 it was business as usual within about five minutes.

I remember them higher than this during the time I've had a mortgage

What I want to know is - it's supposed to curb spending - who are all these people who are supposedly spending too much? People are spending more only where they have no choice because the price of essentials - energy and food - have gone up. The BoE don't seem to grasp that.