[Finance] BoE Interest Rise

[Lower West Stander]

Is there anybody on NSC who actually knows what they are talking about in terms of economics - an actual "economist"?

Instead of a load of failed a-level students who have a vague recollection of something they might have studied (badly) several decades ago and promptly forgot as soon as the exam was over.

I didn't do economics a-level so can approach the issue from a platform of complete ignorance.

The interest rate on my savings account went up yesterday

Yes.

I work in a Fixed Income front office for an investment manager in London.

But as you say, there are far too many know alls on here for me to comment.

 

[Uncle C]

Man with £25k on credit moans about increased cost of credit

https://www.bbc.co.uk/news/business-62408868

For credit card or over extended mortgage. QED

 

[Cheshire Cat]

Man with £25k on credit moans about increased cost of credit

https://www.bbc.co.uk/news/business-62408868

Car loan?
New kitchen?
New driveway?
Flash holiday to somewhere obscure and expensive?
Conservatory?
Massive cocaine habit?
Full petrol tank?

It all adds up.

 

[dazzer6666]

Car loan?
New kitchen?
New driveway?
Flash holiday to somewhere obscure and expensive?
Conservatory?
Massive cocaine habit?
Full petrol tank?

It all adds up.

Thought you were being serious, then I saw ‘full petrol tank’

 

[Kinky Gerbil]

But maybe if wages were increased at airports for staff - ensuring there are enough of them to cope (paid for by higher ticket price/higher aviation tax) that may help - flights will still be full.

How much higher? We already pay one of, if not the highest aviation taxes in the world.

Pubs are struggling for staff, let’s whack more tax on beer to pay for it as well.

 

[southstandandy]

The only vaguely positive thing about the current times we live in, is that through some changes we've made to our lives it's amazing how much you can cut back and save.

More cooking from scratch, no foreign holidays, stopping going to the pub or for meals out, no more ST at the Albion, stopped our cinema membership and gym memberships, cancelled all TV packages except for Disney for the grand children, and using the car far less - has over the last year saved us a remarkable amount.

Yes, we lose out on some of the fun things in life, but hopefully this won't go on for ever. I can remember as a child if we ever went out for a meal it was a real treat or luxury whereas in recent years we used to do this almost weekly. Fingers crossed things will even out in the next couple of years.

 

[tonytowner]

The Bank of England has existed since 1694. In those 328 years the base rate has been 2.5% (where they are predicting it to be next year) or less in about 50 of those years.

 

[pb21]

I think you'll see the point in a few months time

So you’re are saying that people, who aren’t overextend at the moment, will be in a few months due to circumstances outside their control?

What would you recommend they do at the moment, and with the benefit of hindsight what do you think these people should have done previously.

Are you suggesting that people, aka mugs, shouldn’t have a mortgage unless they can afford an unspecified increase in interest rate that may, or may not, occur at some unspecified point in the future?

What are the affordability criteria you think mortgage approvals should be based on?

 

[Leekbrookgull]

Bring back the working practice of Mr 10% on my charge or cut,then you wake up.

 

[Frutos]

Bring back the working practice of Mr 10% on my charge or cut,then you wake up.

Pardon?

 

[Uncle C]

Are you suggesting that people, aka mugs, shouldn’t have a mortgage unless they can afford an unspecified increase in interest rate that may, or may not, occur at some unspecified point in the future?

That's exactly what I'm saying.. Unfortunately its often those same people that boast about what a great investment a house is and how much money they have made. Well here comes the rough to follow the smooth.

 

[Live by the sea]

Even people with a very modest flat worth £350k in Brighton & Hove or a modest house worth £550k will be sitting on a paper profit of 10% , so that’s 35-55k . Lots of remortgaging happening I’m guessing if required . Lots of nothing special houses in central areas across the city many terraced worth circa £1m , so the owners have in effect got £100k to play with if needed .

 

[Cheshire Cat]

A paper profit is no use whatsoever unless you can liquidise it.

Which is quite difficult if you have to live in that particular asset so can't sell it, or if you did sell it you would have to buy somewhere else to live with the cash.

 

[Brother Sid]

This approach to inflation assumes that households have too much money to spend. That is why the BoE thinks some spending power must be taken away from them. But this is nonsense. 20% of all UK households are already struggling to pay bills and many more will soon.

 

[Uncle C]

Even people with a very modest flat worth £350k in Brighton & Hove or a modest house worth £550k will be sitting on a paper profit of 10% , so that’s 35-55k . Lots of remortgaging happening I’m guessing if required . Lots of nothing special houses in central areas across the city many terraced worth circa £1m , so the owners have in effect got £100k to play with if needed .

So no need to sell.

 

[Weststander]

Yes.

I work in a Fixed Income front office for an investment manager in London.

But as you say, there are far too many know alls on here for me to comment.

Except …. economists have not been as one in backing Bailey/the MPC.

R4 and other media outlets have interviewed highly critical economists, who felt they were asleep at the wheel 9 months ago. Arguing that incremental interest rate increases at that time would’ve ameliorated the post Covid spending boom and reduced the damaging shock now.

As the old joke goes: If you put 10 economists in a room, you'll get 11 opinions.

 

[Wardy's twin]

If you want to reduce the amount of money in people's pockets then increase taxation and put higher vat on luxury goods e.g. big cars and expensive clothes and electronic gadgets. There are a lot of people who can't afford basics but there are a lot more who can afford spending on nice things. Increasing interest rates hits everyone.

 

[Weststander]

If you want to reduce the amount of money in people's pockets then increase taxation and put higher vat on luxury goods e.g. big cars and expensive clothes and electronic gadgets. There are a lot of people who can't afford basics but there are a lot more who can afford spending on nice things. Increasing interest rates hits everyone.

Other than people with savings/no debt who seem rather excited, or the folk bizarrely enjoying the ‘punishment’ on JCL’s born in the 80’s/90’s who’ve bought their first home.

 

[WATFORD zero]

Except …. economists have not been as one in backing Bailey/the MPC.

R4 and other media outlets have interviewed highly critical economists, who felt they were asleep at the wheel 9 months ago. Arguing that incremental interest rate increases at that time would’ve ameliorated the post Covid spending boom and reduced the damaging shock now.

As the old joke goes: If you put 10 economists in a room, you'll get 11 opinions.

But if you were a professional economist (or one of the BOE Monetry Policy Committee) who spent nearly 3 years under a Johnson government and are now wondering whether you are going to get Truss or Sunak would you take it seriously ?

Honestly

 

[Weststander]

But if you were a professional economist (or one of the BOE Monetry Policy Committee) who spent nearly 3 years under a Johnson government and are now wondering whether you are going to get Truss or Sunak would you take it seriously ?

Honestly

Watch C4 News from 7.17 tonight on C4+1.

David Blanchflower (you’ll like him, at the time he was highly critical of Tory Chancellors from 2010, very anti Brexit ), took the BoE apart. “Most of the stuff that the Governor said today was poppycock ….”.