So today the Bank of England......

[Earlybird]

....raised interest rates. To combat inflation. So of course, my mortgage payment will increase. Sigh. Can someone explain that anti inflation strategy to me? I'm an economics dunce.

I guess I can just sit in my flat, because if the cost of everything keeps increasing ( but my income holds steady), I won't be able to afford to do much else!

Your mortgage payment increases, and it costs you more to borrow money on credit cards, and you can get more interest on money in the bank. all of which are meant to encourage you to sit in your flat,do nothinga dn spend nothing. which leads to a reduction in demand for everything, which leads to a reduction in prices of everything.

So if it costs more just to live, and we consequently have less disposable income, so only spend on essentials - that helps the economy? Seems to run counter to all the gloom stories we hear about declining volume on the high street...

a recession looming?

The declining volume on the high street stories have (in the minds of the majority of the MPC at least) been superceded by rising inflation and continuing boom in consumer spending, particulary on borrowed money - some would say they are a couple of years too late to spot that one though....

My economics tutor likened setting economic policy to trying to drive a by ony looking in the rear view mirror, and that being cracked.