The Bank of England has cut its base interest rate by 0.25% to 4.75%, leaving a positive real interest rate of nearly 3% in place in the economy, which is going to crush the life out of it.
The move is too little, too late, and leaves the balance of power between the Treasury and Bank of England firmly weighted within the City of London, which does not give a damn about the interests of the country, ordinary people, employers, people looking for jobs and the crises that these high rates are causing for families with mortgages or living in rented accommodation.
If Labour does not realise that it has to act on this issue soon, the path is open to the far-right to exploit this situation, and we know Farage will.
I despair of policy that is so badly constructed when it is obvious that this economy could be run for the benefit of the people of the UK, whichever of its countries they live in. How long do we have to put up with this for?
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I have been watching Professor Steve Keen’s videos, having been introduced to them following your appearance recently. He’s been looking at the Fed’s interest rate policy and also discussing Elon Mush’s cutting the federal budget by a third.
According to the modelling, we are in for a deflationary period if we maintain interest rates around the current levels and the only solution would be to reduce interest rates to near zero. He mentioned doing a review of Rachel Reeves’ budget but I have not seen it yet.
Could you have a word?
Ok….
I can’t find it either, William, but Keen & Murphy’s basics tell us everything we need to know re the ‘balancing the books’ mistakes of Ms Reeves. https://braveneweurope.com/steve-keen-britain-really-really-cant-afford-rachel-reeves
Steve Keen did a 7-part essay series on substack starting here: https://profstevekeen.substack.com/p/britain-cant-afford-rachel-reeves
Do not expect Ms Reeves to do anything positive. After all she worked for the Bank, As she showed in the Budget the City are “protected”.
Recession in 2025?
How long? A long way off I reckon, Richard. Threadneedle St and whatever the UK equivalent of Wall St is called are the only neighbourhoods the Chancellor seems to know about or listen to.
Plebs Place? No-where to be seen! True, there used to be one in the Labour party-of-old before its ‘third way’ traffic flow closed the area down.
Richard, what are your thoughts on the banks comments in relation to the budget. Effectively (in their eyes) meaning that inflation will be 0.5% higher than otherwise and therefore, due to the budget, rates will stay higher for longer?
That is what they conclude
Reeves has to tell them to stop being stupid
She won’t
[…] yesterday on its thinking on inflation when cutting the base interest rate to 4.75 per cent, which, as I have already noted, was too little and too […]