It is good to note that Martin Wolf, in the Financial Times, is as concerned about interest rate rises as a reaction to inflation resulting from increased import prices as I am. is
It's also good to note that his answer is the same: there is no reason to increase interest rates as a consequence of external price pressures. Underlying wage pressure in the UK is very weak. There is, therefore, no inherent inflationary pressure in the UK economy, and for that reason to raise interest rates and risk recession as a consequence of increased import prices would be straightforward folly.
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The high priest of neo-liberal folly in the press, Fraser Nelson, was on radio 5 Live yesterday, bold as brass, calling for a hike in interest rates.
It is true – these people clearly have no empathy or concern at all for ordinary British people.
@BenM
None, whatsoever
It seems to me BenM that you yourself have no concern for “ordianry British People” who struggled throughout the Thatcher years to pay off their mortgage when rates stood at 15+% as opposed to 0.5% now and who are now penalised through their dire return on any savings they may have been prudent enough to accumulate.
High priest? More like a know-nothing little seminarian crawling up to authority.
@Michael
Oh, come on!
I had a house and a mortgage then – and yes – it hurt a little at the time – but relatively house prices were really low and inflation massively boosted the value of property
Anyone in that situation is now the baby boomer owning property that the young can only dream of and never aspire to
I’m sorry – you prove a remarkable lack of ability to analyse and a massive capacity for self interest in making this comment
Neither deserve sympathy
@Michael
If my memory serves me right, mortgage rates stood at 15% at the end of 1989 and for part of 1990, not for the whole Thatcher period. Inflation was very high and so the real savings rate would have been low. High interest rates, in general, choke off investment and real economic activity. Raising interest rates now will probably cause job losses. This will impact ordinary people adversely.
@Stephen
Unless I am missing the point, inflation isn’t that low now! Maybe I am not the most leading economist out there but it seems to me that an awful heck of people who throughout their lives have been prudent and very careful not to rack up thousands of pounds in debt now have to pay for the very people that have done just that.
@Richard Murphy
As for possesing a “massive capacity for self interest” aren’t the advocates of low interest rates either people with a mortgage or business owners themselves who would much rather savers money was precariously invested within their own business as opposed to, alright relatively safely, with a high street bank?
@Michael
I’m sorry – but this is, again, absolutely without logic
Inflation now is about 3%. Most of that is because of import price rises. That in turn is because of a fall in the value of sterling caused pretty much directly as a consequence of moves to save the banks and the need to preserve work in the economy – from all of which savers benefitted most enormously since it was your deposits that retained value as a result of government action rather than leaving you with a worthless claim on a bank – and yet you moan
People are suffering to preserve your bank balance
Think about it
@Michael
This is the last exchange on this matter – it is clear that debate with you is pointless
Has it never occurred to you that putting money in a bank generates not a single cent of a return you might enjoy? It is only the process of lending it on for use that generates that return? Is your world so cocooned from reality that you can’t see that?
Respectfully, you really do need to open your eyes a lot lot wider if you are to have any understanding of your relationships with the rest of society, let alone the economy
Until you can demonstrate that I will be deleting any further comments you make
“I had a house and a mortgage then – and yes – it hurt a little at the time – but relatively house prices were really low and inflation massively boosted the value of property”
Inflation did nothing what-so-ever to the value of your property. It was the value of the pounds that fell, the value of the house didn’t change. This illusion of growth is part of what lies at the heart of the recent property boom. Property holds it value, while the debt is inflated away. Without inflation, paying off all that debt hurts. Much easier just to crank up the presses and wash it away on a raft of pound notes.
Inflation is how we measure people getting poorer, nothing more.
@David Moore
Respectfully, I think your analysis is very wrong. I entirely agree that debt was inflated away, and what well-being that creatives are so many people! and I have not seen those who suffered a crisis of impecunity as a consequence – our old people are now the wealthiest in the country, and as a generation the best off that they have ever been, even including those who are on basic state pension is, who broadly speaking get better services than any previous generation have enjoyed
How will we make people poorer by washing the current bad money, owned by a tiny minority, out of the system so that the vast majority can work? Please explain
It is in fact pointless posting any comments on this site because if the author, namely Richard Murphy, disagrees with you he simply deletes it. Who said there’s no such thing as free speech!
@Michael
There is free editorial policy
And there is free speech – you just have to try to contribute to debate
It’s not hard
But you aren’t seeking to do so
And further comments of this sort will, of course, be deleted
@Richard Murphy
Debate or concur with your opinion??
@Michael
Debate
But let’s be clear – I am will aware that debate with neoliberals and libertarians is a complete waste of time – since their assumptions necessitate a closed mind unrelated to reality so debate with them is not possible and I do not do it as a result
I am not an economist but I hear of all the comments from savers saying rates should go up etc, however if rates go up and people start to lose their homes and people stop borrowing then where does the money come from to pay higher rates to these savers anyway. I also don’t understand why people save and save then just want to live on the interest when they retire and don’t spend the capital and here’s me thinking money was for spending and you cant take it with you so spend it and stop moaning. Inflation I believe was 1.9% prior to the VAT rise so govt is to blame as usual.