From my Twitter account not very long ago:
One day economic history will record how truly terrible the idea of independent central bankers appointed from the ranks of the wealthy to serve their best interests really was.
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… and we all knew it would fall!
The pertinent “new” news is the Month-on-month data which showed a 0.1% rise – everything else was already known about the Y-o-Y number.
And the M-o-M number annualises to 1.2% – that is the best “real time” take on inflation.
To be fair, non-core rose 0.4% (M-o-M) which is 4.9% annualised and if that were maintained we might have “an inflation problem” but given the current squeeze on real incomes I would want top see about 3 months worth of data before I even raised an eyebrow…. and even then, it might just be a rebalancing countered by lower (yes, lower – not rising less quickly) energy prices.
Given the time lags in monetary policy effectiveness it would be bizarre to take this data as evidence for the need to tighten “further for longer”.
Agreed
To anyone in the ‘know’ this behaviour tells you all you need to know that interest rate rises are nothing but a feeding frenzy for creditors. Nothing to do with controlling inflation – just making sure their noses are in the trough.
A shameful big lie has been perpetrated for far too long.
I had to laugh at Justin Whatshisface on R4 this morning talking to some numpty banker from Naff-West asking if it had been unreasonable for us to expect low interest rates. Of course the wanker – sorry – banker had to concur in a chumly like fashion.
I mean what a question? No context. No discussion. He gave it to the banker-man on a plate.
It’s like asking a lion if it thought that it was wrong and unfair that their prey tended to run away from them when they went hunting!!!
For God’s sake. The BBC! Spare me……………………………
Hi Richard,
Please help me to understand this. Interest rates were put on an ’emergency’ footing after the financial crash in 2008. They stayed on the floor at near zero for almost 15 years. During that time, average UK house prices increased £100k, from around £150k to £250k (source: Statista, 2023) at a time when wages have flatlined. We have also seen an explosion in BTL purchases throughout this century. The majority of BTL mortgages are interest-only.
I blame near zero interest rates for this, I cannot see how rates at permanently zero is a good thing. Why am I wrong? I’m not writing to have a go, just genuinely curious.
Many thanks,
Laura
The government proactively pushed house prices up – advancing hundreds of billions to provide loans to make sure this happened
That outcome was not to do with QE
But, the QE effect could also have been controlled by imposing credit limits – which was not done
There was no need for QE to have had this outcome
And rates at zero are good news
People can afford housing if prices are controlled and the upward flow of wealth is liimited whilst investment is affordable and government debt has no or low cost
I want low interest forever
But I would control the consequneces
Big lightbulb moment for me there, Richard
Thank you 🙂
House price will rise if there is a shortage. They also rise if Landlords buy houses cheaply, intent on letting them, where your rent helps pay their mortgage.
The charity Centre for Cities estimates we need 4.3 million houses. https://www.centreforcities.org/publication/the-housebuilding-crisis/
The private sector won’t build the houses as they can’t be sure they’d sell them in these times of financial uncertainty.
The government doesn’t want to build them, because there is no profit to be made.
Between 1945-1957, the government (not private companies) built 2.5 million new homes. They also created the NHS. Funny how they can’t manage today.
Indeed