Bank Base rate kicking us when we’re down

Bank Base rate kicking us when we’re down

12:21 PM, 5th May 2022, About 3 years ago 42

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The Monetary Policy Committee have voted by a majority of 6-3 to increase Bank Rate by a quarter-point to a full 1% with 12 month CPI inflation rising to 7.0% in March, around 1% higher than expected in the February Report.

This is despite the vast majority of inflationary pressure coming from external global costs that we can’t control. The price of food is the price of food and as an essential item, an increase in interest rates is not going to control our demand or the costs. The same argument largely goes for energy and fuel.

The counter-argument is that pushing up interest rates increase the flow of money into Sterling boosting its value and decreasing the cost of goods purchased in foreign currencies.

The MPC has reaffirmed its preference in most circumstances to use Bank Rate as its active policy tool when adjusting the stance of monetary policy and has indicated further rises are predicted to be required up to around 2.5% by mid-2023, before falling to 2% at the end of the forecast period.

CPI inflation is expected to rise further over the remainder of the year, to just over 9% in 2022 Q2 and averaging slightly over 10% at its peak in 2022 Q4.

Wage growth is considered a risk factor for inflationary pressure with unemployment continuing to fall to 3.8%. However, there are some signs that the cost of living crisis is already affecting consumer demand.

The overall conclusion is we will have to wait and see what happens to the global markets and supply chains over the coming months and year before a clear indication of how long it will take cost inflation to wind out.


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Daveknowstheregs

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13:15 PM, 8th May 2022, About 3 years ago

Reply to the comment left by Gromit at 08/05/2022 - 12:40
Gromit says, “Perhaps you could provide the source for your assertion to the contrary?”

Common sense. Google supply and demand.

Daveknowstheregs

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14:42 PM, 8th May 2022, About 3 years ago

For Wallace and Badger:
10 houses are for sale, with 10 buyers. 1 buyer is a landlord and buys 9 houses with cash for renting out. Only 1 house is now left for the other 9 buyers requiring a roof over their head.
What does Wallace and badger think happens to the remaining 1 house price, with 9 buyers left fighting for it?
Answers on postcards…

Gromit

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16:01 PM, 8th May 2022, About 3 years ago

No evidence or research then!

But Landlords buy with their heads not their hearts. Landlords will not pays over the odds for a property, home-owners will.
Grant you a cash buyer with no chain has its attractions but the stats do not back that up.

Daveknowstheregs

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18:13 PM, 8th May 2022, About 3 years ago

Reply to the comment left by Gromit at 08/05/2022 - 16:01
Many people don’t require a survey to know the bleedin’ obvious.

Gromit

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7:40 AM, 9th May 2022, About 3 years ago

Reply to the comment left by Daveknowstheregs at 08/05/2022 - 18:13
...so you do not believe the research, rather than questioning whether your own assumptions/perceptions are correct.

Daveknowstheregs

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7:50 AM, 9th May 2022, About 3 years ago

Reply to the comment left by Gromit at 09/05/2022 - 07:40
Gromit, if you don’t know the bleedin’ obvious, let me assist (if possible?)

Imagine, do keep up Gromit, a world with a blanket ban on every landlord in the world.

Do you think property prices go up or down?

Answers on postcards….

TheMaluka

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8:03 AM, 9th May 2022, About 3 years ago

Reply to the comment left by Daveknowstheregs at 09/05/2022 - 07:50
You may know the regs, although I have my doubts about that, but you have no idea of the scientific approach to statistics and data analysis. The "bleedin’ obvious" as you so poetically put it, is often far from correct, all assertions should be backed up with solid facts not opinions.
As to whether property prices would go up or down were a blanket ban on landlords to be implemented, I have no idea as there are no facts on which to make an assessment.

Gromit

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8:08 AM, 9th May 2022, About 3 years ago

Reply to the comment left by Daveknowstheregs at 09/05/2022 - 07:50Don't change the subject.
In your world you see Landlords driving up house prices but the in the real world research has shown this not to be the case (or only marginally so).
Do you not accept that low interest rates and lax lending criteria plus demand increasing Government policies (like Help to Buy), coupled with net immigration and a supply shortfall in housebuilding numbers have not had the major effect on house prices? That's what I'd call the "bleeding obvious".

Daveknowstheregs

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8:16 AM, 9th May 2022, About 3 years ago

Ah well, I did try to teach you something… some people know the bleedin’ obvious,

others do not!

TheMaluka

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8:42 AM, 9th May 2022, About 3 years ago

Reply to the comment left by Daveknowstheregs at 09/05/2022 - 08:16
You stated an opinion without any supporting evidence, how is that teaching anything?

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