UK economy: will latest interest rate hike actually curb inflation?
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- Опубликовано: 21 июн 2023
- If mortgage payers, renters and businesses were feeling the squeeze before today, well now the pips are coming out.
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Five per cent is the new interest base rate announced earlier by the Bank of England - the highest it's been for fourteen years.
That's the pain. The gain?
According to the bank - reduced inflation and the avoidance of a recession.
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The economy is grappling with uncertainties, global fluctuations, and pandemic aftermath, causing instability. Rising inflation, sluggish growth, and trade disruptions need urgent attention from all sectors to restore stability and stimulate growth.
Things are strange right now. The US dollar is becoming less valuable because of inflation, but it's getting stronger compared to other currencies and things like gold and property. People are turning to the dollar because they think it's safer. I'm worried about my retirement savings of about $420,000 losing value because of high inflation. Where else can we keep our money?
Well I recommend you make a diversification plan because it's been harder to build a good stocks portfolio since COVID. My colleague suggested I hire a brokerage Adviser, and I've actually made over $457k with their help during last market upheavel. They used defensive strategies to protect my portfolio and make profits despite the ups and downs.
@@maryHenokNft I'm intrigued by your request. Could you please share contact information for your Adviser? I'm worried about the decreasing value of my portfolio.
I'd like to give significant credit to *Camille Alicia Garcia* who maintains a strong online presence. You can easily find her through a web search. While there are some other individuals worth considering, it may be more challenging to locate them. In addition, Julia has provided excellent guidance throughout the year.
Thank you for the information. I conducted my own research and your advisor appears to be highly skilled and knowledgeable. I've sent her an email and arranged a phone call. Her expertise is impressive, and I'm eagerly anticipating our conversation.
The rising interest rate can surely control inflation, but won't prevent erosion of the eroding purchasing power of the US dollar. I have learnt my lesson this time. The banks can't be making money off my money, while inflation eats into it. I have set aside 650k to invest in the stock market now, since that keeps up with inflation, but I don't know how to get started.
Yes, truly, investing in the market, even if it's just the S&P 500, can keep up with inflation, because the growth rate of stocks will always exceed the inflation rate. But if you don't have the courage, you could just invest with a financial advisor, which even has greater return on investments, while securing your investment against losses.
Keeping money in the bank is like paying banks and the Govemment. Here's how it works: The bank gives out your money as loan, and charge interest obviously higher than inflation rate, and then give you, the depositor, interest lower than inflation rate. That means net loss for you. That is why I prefer to invest, and on average, my advisor makes returns that always beats inflation!
@@PhilipDunk I've been skeptical about the banks for a long time, If it's okay, can I know who your advisor is, because I need some recommendations?
There are a lot of independent advisors you might look into. But i work with “Vivian Carol Gioia” and I have been working together for nearly four years, and she is excellent. You could proceed with her if she satisfies your discretion. I endorse her.
Thanks, I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a call.
Sadly with each passing day we can see the impact this awful policy has had on the UK. Tied up in red tape and tariffs with lower GDP than before the pandemic whilst the others in the G7, including Italy, are above. The lower GDP means we do not have the headroom to pay our way in the world and must resort to borrowing.Whilst there are rich people in the UK; a great many of us are poor and now we are poorer still. What steps can we take to generate more income during quantitative adjustment?I can't afford my hard-earned £600k savings to turn to dust
That is everywhere. The problem is, with a rising labor shortage, that industry will be the hardest hit. Fundamentally, restaurants as an industry are only viable with cheap labor and cheap rent. Right now, we have neither.
@@Patriciacraig599 Well, the top players and pros have exclusive information and data paths that are not disclosed to the public. Knowing the strategies to use during this time is one thing and having the right information to execute them successfully is another.
@@margaritasbunny Absolutely, Fiduciary-counselors have exclusive information and data paths that are not disclosed to the public.. I've made north of $260k in raw profits from just Q1 of 2023 under the guidance of my Fiduciary-counselor “Elizabeth Pan Holt”. Am I selling? Absolutely not.. I am going to sit back and observe how this all plays out.
@@PhilipMurray251 How can I touch base with Elizabeth? what are her services like? is she verifiable? do you think she can help me, I live in Canada.
@@gracesdonny1532 She is well-known in her industry; you may have heard of her before I did thanks to a Newsweek article. You can look her up online.
For all those years we had low interest rates I had a LOT of savings and was getting no interest. Then I finally buy a house and within 3 years interest rates skyrocket. There is no end to screwing over my generation, especially those aged 35 to 40.
I think you mean for those 40 and younger. We're being f*cked left, right and centre
WTH were you thinking? Why weren't you putting those savings into a stocks and shares ISA? You have nobody to blame for being an idiot but yourself.
Everyone below that age is also screwed. (I'm in your brack too)
Claus Swaab of the World Economic Forum has already unveiled his plans, you will own nothing and be happy.
Rishi Sunak is just carrying out orders.
Well, the government and the Bank of England didn't plan for a pandemic (followed by a war in Europe) to occur just when you bought a home... It's just a case of bad luck (AKA Murphy's law).
Imagine building nothing but 3-5 bedrooms, dismantling all our gas storage, not buying renewables, divesting from having a healthy, educated population, getting rid of trade and labour, crushing the workers groups trying to make the country run for people, raising taxes on the productive fraction of society to give more power tokens to already rich crooks, allowing the number of people needing to beg for food increase in millions.
"The problem is that the poor are buying food and living in houses, we must stop them, make them accept they are poorer"
It’s too stupid to be stupid. It’s intentional and planned. The new globalist world we are being ushered in to can’t possibly be implemented with the west in a position of strength. They have to dismantle to rebuild their poor digital prison.
Yep
That's it in a nutshell, well put 👍
Don't often comment but that sums it up totally in a paragraph ❤
I always say when the working class starts bettering themselves the government will put us back in the gutter 🏴🇬🇧🤣
BoE: "Oi, smelly poor people! Stop asking for wage 'increases'".
Meanwhile... FTSE100 CEOs: Pay increases 39% (2021) & 23% (2022) to 103x median salary.
Cap CEO pay at £100k. That will curb inflation.
@@MrSize14feetAnd cap bank accounts. You can earn lots of money if you spend lots of money. You're not allowed to hoard it.
@@dc6807 That doesn't remotely address the problem. This is society-wide, not just an individual issue.
@@dc6807 Then you're not understanding the basic premise of a society.
For us to be able to live the lives we do, we need people working jobs at all "levels" of society. Especially these low-skilled positions you mention. Someone HAS to do it. These people have to be able to pay their way so their job has to pay them a decent living wage.
Saying "get an education and a better job" is really missing the point. If everyone did that, our society wouldn't work. But it equally doesn't work if all the people filling those roles can't afford basic essentials due to price increases.
@@dc6807 Question for you, who's gonna empty your bins? Who's gonna package and deliver goods you've ordered online? Who's gonna stock the shelves of the supermarket you shop at?
Wages are very low in the UK
Partly caused by unscrupulous employers being allowed to advertise positions overseas and pay lower wages!
Extremely low
Exactly! And we all know this, we're all living it, yet they keep trying to tell us high wages have caused this crisis. When are the riots starting? I'm there.
This is financial advice and I never give financial advice: DONT LEAVE DURING THE BEAR. If you don’t want to invest…learn. If you don’t want to learn…build. If you don’t want to build observe. DO SOMETHING…other than leave. There is so much opportunity here. Take advantage!
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Rishi Sunak: I will halve inflation. When it doesn’t happen, it’s all the BoE’s fault!! Rishi took a gamble to try and take credit for bringing inflation down but now his mp’s are desperately trying to blame everyone else. To me when things are going badly wrong the Tories will blame everyone else and never admit they have buggered up the country.
Well said
Who will he blame for not stopping the small boats crossing the Channel?
@@juliewills8034 I don’t really care about small boats TBH. I would process their claims quickly and get them to work in the areas we have major worker shortages. Stop spending ridiculous sums of money on threats of sending them to Rwanda etc. Process their claims and I’m sure they will be willing to work and provide productivity.
@davidthwaites4825 you mean like every politicians? No politician accepts they messed up and blame everyone else
@@juliewills8034 that's a much smaller issue
It's no accident that Lloyds Bank is now the largest landlord in the UK. These people are poised to make billions from the repossessions that are about to happen. They know exactly what they are doing.
They’ve certainly done it before
Ahhh lloyds bank. Don't trust lloyds at all. In beginning of 2009 lloyds brought me in and brazenly wanted me to pull my Scots widows pension and put it into their insurance policy. I was stuck in their dammed tiny room in a horrible circular tub chair with TWO lloyds bank employees trying to get me to transfer my money. I was there ages. I'd just given birth was on maternity leave from my job and I only got out of the room because I knew my pension terms. OUTRAGEOUS behaviour. Should have reported them but was scared I'd lose my pension.
Depends on how recently the properties were sold. Banks nearly always sell to a discount on the loan value (usually by the equity paid in) and with higher interest rates carrying the properties for 6-12 months while price stabilize is expensive
Inflation has torn into global markets, with investors ripping up their forecasts for further rises in interest rates and dumping bank stocks around the world. I'm at a crossroads deciding if to liquidate my dipping 200k stock portfolio, what’s the best way to take advantage of this bear market?
The SVB situation is a reminder that Fed hikes are having an effect, even if the economy has held up so far,” It’s precisely at times like these that investors need to be on guard against the next certainty. You don’t have to act on every forecast, hence i will suggest you get yourself a financial-advisor
I agree, having a brokerage advisor for investing is genius! Amidst the financial crisis in 2008, I was really having investing nightmare prior touching base with a advisor. In a nutshell, i've accrued over $850k with the help of my advisor from an initial $120k investment.
@@UshnicYuvnikof I’ve actually been looking into advisors lately, the news I’ve been seeing in the market hasn’t been so encouraging. who’s the person guiding you?
Do your homework and choose one that has strategies to help your portfolio grow consistently and steadily. ‘’Colleen Janie Towe” is responsible for the success of my portfolio, and I believe she possesses the qualifications and expertise to meet your goals.
@@UshnicYuvnikof Thank you. I will search on her site online and do my due diligence. If She seem proficient. I write her an email and scheduled a phone call.
Bailey blaming wage rises for price increases makes no sense. Wage rises are another price increase - a rise in the price of labour. He's blaming high prices for high prices.
Bailey is right as you see, now inflation is much painful to stop.
@@lorenzom7237 Wages haven't grown for decades, this level of inflation has nothing to do with rising wages.
That is his cop out for being absolutely useless at his job. Over half a million quid a year this guy is paid.
All to do with corporate greed.
No. Bailey is telling you an economics 101 principle. Wages are a cost for your employer. When it costs your employer more money to produce the same level of productivity, prices have to go up. In a nutshell that's inflation.
It doesn't matter how long it's been since you think you've had a wage increase, that's entirely irrelevant. Wages should only ever go up when productivity increases. Productivity has been decreasing for the last 20 years which is a major component of why this is happening.
The unions striking makes this worse. Workers demanding pay rises makes this worse. Yes, high inflation makes it harder to live. That's why it is so important to get under control.
There is too much spending taking place for the level of productivity. Stop spending and be more productive at work.
The media is currently barraged with a lot of economic data right now. It takes a lot to see beyond the whole ocean of news on focus on what is important, which is that no matter how low stocks go, they always bounce back. I really ignore all the news and keep investing. I recently allocated about $121k to put in the market as we anticipate a crash. Any recommendations?
Be careful not to jump into trading without any proper training because it can be very detrimental. Many folks jump into trading only to suffer great loss at the very beginning. Do not try to imitate advice you get on the internet. Better still, ask questions. Get the services of a professional stock expert or a licensed broker.
@@gracesdonny1532 Yeah, this makes sense. You'll tend to get a lot of recommendations, but most would be inaccurate. I personally don't like engaging in those mundane decisions, so I just allow a wealth manager do them for me. Been doing that since 2020, and have pulled in a cumulative of more than $213k.
@@HelenaBonham-pz4ly Please, could you recommend the FA you work with? I could really use some help right now.
@@margaritasbunny The person I work with is "Elizabeth Pan Holt". She's proven really proficient for me, to be honest. You could look her up yourself if you want.
@@HelenaBonham-pz4ly Thank you for this amazing tip. I just looked the name up, wrote her and scheduled a call
A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
You’re right! The current market might give opportunities to maximize profit, but in order to execute such effective transactions, you must be a skilled practitioner.
@@IrenaDolinsek On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal portfolio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my portfolio this red season. I’ve made over $150k since then.
@@Erinmills98 Please, who is the advisor that assists you with your investments?
@@AstaKristjan I'm on an investment ship led by well-known consultant Jennifer Puckett Hunter. You can easily contact her by conducting a quick internet search with her name.
@@Erinmills98 I’m delighted to engage in this opportunity, I just found the professional’s web page and have already written her.
The failure of SVB and everything happening has left the markets in shreds. I'm at a crossroads right now, deciding if to liquidate 200k portfolio down by 10%, and it's uneasy for me to not panic after my recent awful divorce. I just need investing ideas to afford my retirement
sorry for your divorce,
there are actually ideas that could be put in place for solid gains during a crash, but such strategies are carried out by distinguished advisors
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sometimes we fail to realize how resourceful an extra income can be until crisis.. at this point i'm looking for assistance with where to put my money during this financial recession, mind if i look up your advisor pls
Her name is “Tierra Tanisha rose” she's well grounded with 22years experienced in the financial market, and extensive knowledge of portfolio diversity. I recommend researching her credentials further on the internet her site
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The simple answer is no. Much of our inflation is caused by global corporate profiteering and no action is being taken about it. We have no wage pressure causing it. Banks profiting. Corporations profiting. Poor getting poorer. Middle class getting poorer. Businesses going bankrupt. Disposable income paying for debt and more expensive essentials and no end to it
Exactly. The central bank increasing interest rates is a cure for inflation caused by overheating economy fueled by excessive money borrowing.
The inflation we're suffering now isn't caused by the economy overheating, on the contrary we're looking at near 0% growth or recession. The inflation is caused by issues with supply and, as you said, profiteering, and interest rate hikes will do nothing to combat that. All it does is cause immense hardship for anyone who isn't living in a zero-debt house (i.e. mainly wealthy people and the elderly)
I don’t understand how nobody saw this coming.
It’s been obvious ever since homes were more than £100k. Nothing can go up forever.
Greed always ends the same way.
Yes I forecasted this and I am just an electrician now retired. Don't have to be a financial expert to see the obvious. The Experts have Failed. Should have been tight controls over house prices with a Cap. Homes are an essential requirement for everyone , therefore should never be use for high profiteering. Domestic Property was treated as a gold bar for investment.
Many become millionaires just selling their home when others are sleeping in a rented single room.. system needs overhauling. Greed gets in the way, so be prepared to loose your home. In fact. Do not move out. Stay put. If everyone one did this , it may turn the tide.
@@kennethausten Completely agree. The amount of people who treated their homes as assets, not only is it risky but also somewhat immoral. Imagine if we invested in our British companies like we invested in property. We would be promoting innovation, invention, discovery and jobs. Instead, we are investing in brick and mortar, as if it will be anything more.
Nothing can go up forever except in australia 😂
@@ed7384 It’s mad isn’t it!
Fingers crossed for you guys that you get a 1990’s Tokyo style crash & housing becomes fair again.
God knows that’s what we need in Britain but unfortunately our housing is open to the world.
Except profits. In fact, the expectation of perpetual growth in profits is one of the major issues right now. For something to grow, it needs to feed on something. And the corporate profiteers are feeding on society's basic needs.
Fortunately higher corporate profits don’t impact inflation.
They do provide more tax revenue for the government which they need to fund its huge debt.
@@jjefferyworboys8138raising tax on those profits would therefore have the double impact of lowering inflation and the deficit. Win win.
@@jjefferyworboys8138 if they pay their taxes.
Seeking more profits does though
@@jjefferyworboys8138 whatever the topic, be it proxy wars, E.U.A. issued experimental medical procedures, or the ongoing crimes of the centuries old Freemasonic City of London Crown Corporation crime cartel, jeffrey is always perfectly aligned with the current GCHQ talking points 😂
sick of hearing people saying we had it much worse in the 80s 90s, this is 2023 where houses are 300k+ we literally just slave to the grave, taxed in every angle in this country. this goverment has got to go next election!
Isn’t Liberal Democracy wonderful
But back in the caveman days you had to fight bears for a place to live.. /s
Let's not forget that buy-to-let king Tony Blair put us on this course by protecting property prices at any cost during the previous banking crisis when house prices could have reverted back to affordable levels but dozens of measures were brought in to protect 'home owners' and landlords.
Labour are equally opposed to the middle class and usually worse with the economy, don't forget who's side Sadiq Kahn is on
interest rates were 16 per cent i. The 80 s so yes it was tougher
Inflation occurs when demand outstrips supply, but the problem is not demand. It is lack of supply. What do we produce? Where are our industries?
The position of the government and the Bank of England is incoherent. We have inflation because wages are too high? In the public sector, people haven't had an above-inflation wage increase for a generation. In much of the private sector, wages haven't increased vastly either. We have a cost of living crisis, where folk can barely make ends meet, so who is generating this excess demand?
The solution of the Bank and the government is to make everyone poorer so they will spend less; if you have a huge mortgage or loan repayments, you'll spend less on luxuries like food and transport. The government will introduce more austerity and everyone will have less until eventually, the country has nothing left.
Clearly, this is mad - we need to start making things again, this country is greater than just one square mile in the centre of London.
Why has saver being getting no intrest on savings for so long yrs and yrs .this has been bad ..
I took a mortgage at 10% back in the late 70s. 25% deposit. That was the Norm. Over the years interest rates rose to 15%. Because my loan was sensible I was able to cope. Could not today. House prices rose way too high as interest rates dropped to zero almost creating a dangerous situation. It left little manoeuvre. What I predicted is now happening. I finished my mortgage at age 52. A 25 year mortgage.
Is there no fixed rate in England?
Spot on. People saying "well interest rates were 15% in the 70s and 80s" forget that their income to housing cost ratio was way lower because house prices were actually affordable
I am sure the house price at that time must be a fraction of what it is now. The increase in wage has been mostly below the increase in property price for the past 2 decades.
Good for you. 1980-90's generation is seriously fudged
@@SM710Just buying a house for £130k that the previous owners paid £3450 in 1970s. I'd imagine that would have been equal to a year's salary for the time.
Inflation in the 80s different not the same as inflation today.
The real matter today is productivity. The UK is in a dire state
Cant blame people ,there fed up treading water for the last 13 years.
The poor productivity comes from poor governance. Lack of smart investment, over finacialised economy, rampant legalised systemic corruption and a vindictive backwards minded political and financial elite that refuse to work with ordinary people and instead tried to crush and dominate them. This loony project was always doomed to fail
I fail to see how it’s productivity when everyone I know works multiple jobs
Because people have been forced to work harder, but businesses have refused to invest in the things that would allow them to work smarter. When productivity stalls people have to work more hours to keep up
@@YggrdrasilWorking doesn't mean productivity.
Productivity means innovating, selling, designing things, taking risks....all of that.
The Soviet Union forced people to work full time or go to prison, and their productivity was dire, hence why they were so impoverished.
Interest rate rises are to encourage us to save and stop spending, but with inflation, mortgage rises and energy prices. Who can afford to save!!! These rises will never work because of this!!!
I can with only 24.5k salary.
"We can't have the current level of wage increases" - Andrew Bailey, Governor of the Bank of England, current salary £575,000 per year...
Relative to other top bankers his salary is low. In comparison with premier division footballers its pennies !
Yes exactly. The disparity between the wages of the executive class and the working class has gotten wider and wider over the last 40 years. At the same time the skill and competency of those executives hasn’t notably changed. Meaning they are getting an ever bigger slice of the pie for no reason other than they are the ones holding the knife
@@jjefferyworboys8138 That's just "what-about-ism". The point is that he made the comment about the others whilst drawing a huge salary himself. Telling people to curb wages whilst earning £300 per hour is hypocrisy.
Woaah! It's mad that someone on £575,000 after tax and national insurance. Would take home £310,913.14 per year... and per month would receive £25,909.42. And that is literally wild to me, someone who earns minimum wage. These people are just laughing and are so out of touch
yeah
Nothing like the husband of a multi-billionaire telling you 'we're all in it together'
😂.. that made me chuckle. So true.
Hey! At least he is trying to fix things.... And unlike fing Johnson and Truss or whatever, he doenst need to do it because he is wealthy as f already
We need to put a limit on how much of our resources the rich can own
He's got stacks also
@@ageoflove1980 they are both rich too
4:11 hahahahahaha 😂 Rishi is 100% on it, nobody panic…… 🏃♂️💨
I thought for a moment he said he's 100% honest
It's funny white people ruled by some Pakistani
I saw this coming over ten years ago which is why I put every penny I earned into paying off my mortgage. This is just the beginning
You should have sold your house last year then and rented mate if you have a crystal ball. Your house is about to lose 30% of its value.
The start and back to normal by the end of 2024… also this won’t affect as many people as you think as everybody I know got a 5 year fixed in 2021/2022…
What !! Are you a clairvoyant then .
@@agnosticevolutionist3567 You dont need to be a clairvoyant to realise that when things go south, johnny normal is going to have to pick up the tab.
@@andrewsmith3613Doesn't matter. Its your home first and foremost.
The underlying cause of this is the exorbitant rise in house prices over the last twenty or thirty years. In the 1970s the average house price was two years of average salary. In the 90s it was 3 years of average salary. Now it is now 9 years of average salary. Historically, a 5% interest rate has been perfectly manageable. But when the amount of debt you have taken on to buy a house is so much larger than it was previously, 5% of that much larger amount is now also that much larger. So many price-inflated homes have now been bought in the UK with mortgages that borrowers find 5% or higher to be a difficult burden to bear. But that is not because 5% is high, it is because the amount of debt that needs to be taken on relative to annual earnings is so much higher than it was, which has led to a very brittle economy in which many cannot support higher interest rates. The other side of the coin is that many people, particularly investors and professional landlords, have bought property precisely because they know it will continue to rise exponentially and the extra cash they have lying around makes them more profit from property than from other investments. They have been looking at 15-20% asset appreciation a year, while those saving up to try to get a mortgage have been looking at 0.1% on their savings.
The useless unelected rishi is spending enough of your money on illegal scum to pay off every one's mortgage
No that is the underlying effect.
The underlying cause was mass inflow of reality from council to private hands at low interest rates
No because the rich don't have mortgages,
Of course they do. It’s leverage.
Oh they do …
Lots of debt.
They do, even at 6% its cheap borrowing.
The Tories have been mostly trusted by the voters. Good luck with Tory economics.
It's all irrelevant considering the interest rates are rising throughout Europe. Enough of political pandering
@@felixsmith5234 I disagree. Tories and Labour are equally guilty of mi's-managing public services etc but above all they are more interested in thir own self interests. I wouldn't vote for any of them
All political parties are the same, all in it for themselves
There's going to be a lot of people either moving back home with the folks or sizing down I feel. This country is simply becoming unafforable to live in.
Unless you are an illegal migrant; then you get everything for free.
On one hand we are being told that we are getting paid too much, yet most people don't seem to be able to afford essentials due to increased cost of living and now have to find a way to affording increase in mortgage repayments/ rents. It is the government that benefits from this, as they keep taxing us more and more and big businesses who continue to pass on the cost to end consumer, who in turn pay the government increased taxes as they make huge profits. This is calculated hoovering of any liquidity any of us have built up over time. But with this Tory government everything is everyone else's fault- now the BoE is their target.
The inflationary pressure is largely due to increase in energy costs, which bleeds into every other sector of the market. It is not due to an overheated economy, so interest rate rises to reduce demand make no sense and will actually make the problem worse. The fact that the BoE seems incapable of seeing this is deeply worrying.
Meanwhile energy companies are both price gouging and making record profits. The price of Brent Crude is lower than just the before the Rusdian invasion of Ukraine, yet forecourt prices are not reflecting that fall in price.
The only way out is for the government to:
1. Suspend the BoE 2% inflation target mandate to stop them being idiots.
2. Windfall tax on energy companies.
3. Introduce price controls on fuel
4. Take steps to secure energy supply in the same way France has by nationalising sectors of the industry.
In a functioning democracy, what is good for the health of the country, economy, and citizens, should align with the self interest of politicians keen to stay in a job. The fact that the Tories show no interest in utilising the levers of power do anything about this is mystifying, as they are guaranteed to lose the next election at this rate. Sunak is like a rabbit in the headlights while Bailey appears to not understand the underlying supply side causes.
They can't upset their rich oligarchs and media by taking those steps.
Central banks think people buy too much stuff and that causes inflation so choke markets and people with high interest rates. People have barely enough money for food and energy, do they think people are buying too much energy and food?
@@engineering5090 60% of inflation is caused by corporations. But will they target them .. course not.
Target should be 3-4% - the supply side economy that supported 2% is gone - China is about to collapse and India won’t be too far behind as it hits a food crisis only seen in recent years in Sri Lanka
Growth bubble is over ; standard of living will fall.
Increase taxation; close off shore loopholes; invest collected taxes exclusively in investment, especially in new schools and hospitals - I’d also nationalize all transportation, invest in capital improvements, offer investors debentures to invest for when it’s privatized in 10 years
This MP said in the same interview that the BoE was slow off the mark and that should now pause... which one is it then?
Yes, haha. Tory MP placing blame squarely on the BOE for not raising rates earlier, but then wanting to be on the side of mortgage holders by suggesting rates shouldn't go up now. Trying to be the tough economist and the good guy at the same time. Nauseating.
If people need to remortgage and they go with 2 or 5 years then a huge chunk of income is lost for literally years which would mean low growth for years...
Thanks for posting
This is very scary, even if you've paid off your mortgage your still in danger.
In New Zealand our Reserve bank governor came back from the meeting at Jackson Hole in August 2022 and said in an interview "the plan is to take the interest rates up tp 7%". The interviewer laughed at him, but here we are. They may not be finished yet.
The thing that bugs me about interest rates, speaking as an American, is that so long as you're operating in a free market system, high interest is the main way to strangle inflation. Okay, fine. The problem is that the very powerful people who determine the interest rates don't have to share in that pain. So once they figure out how to get inflation back down, they aren't interested in doing anything else to make the pain bearable for the people beneath them on the totem pole.
That's the real problem with modern economic policy. IMO. Sometimes you have to do unpalatable things. But in that case, leaders need to share in the suffering and not just reap the benefits and push the bad on to everyone else.
It's like they spin the wheel every day to determine who they're gonna blame this time!
Intrest rates now back up to the level just before 2008 when they were lowered to emergency lows. A 15 year 'emergency' apparently'
Yeah, but house prices have gone up massively since then. Folk bought houses for under £100k that are worth £400-500k now.
So if you bought one of those 100k houses back then 5% interest was £5000. If you bought a house at 400k recently, that interest rate equals £20,000.
Oh and average wages haven't risen above inflation rates, so now it's no higher than wages in 2008.
@@petersmith6678 I don't disagree.
People did some very silly things to exploit those emergency measures, bidding way too high for houses was one of them.
@@jrcp106 yeah, but the thing is when people put in offers on houses, they aren't economists or aware that it's too high. That's a governmental failure too - it inform and educate
Not ‘just below’ at all … long way to go.
@@petersmith6678 People shouldn't rely on the government for their education. The government ruin pretty much everything they touch.
All because the printing money 😢
Completely incorrect. This is a supply side issue rather than monetary supply issue
@@nickrails you print money (borrow) and not raise taxes to pay for it then get everyone to pay via inflation?
@50_Pence QE is inflationary, but the real bulk of inflation is people's fuel bills going up roughly 80%. This affects every industry from farming to haulage, and that increase is passed onto consumers who are struggling to pay their energy bills. In turn consumers demand higher wages to cope with the cost of living. Take that issue out of the equation, and the inflationary effect of QE would be minimal.
By the way, alot of that money was printed when the BoE had to rescue the bond market to prevent economic collapse following the Truss budget, so without that disastrous budget, a substantially smaller (tens of billions) amount of new money would have been created.
I saw some of the mortgages being offered for real estate after a visit to the UK and was shocked at the land prices. It was the first time I saw a multi generational mortgage.
2:05 so who do the call centre people call??
Lots of independent people I watch on RUclips predicted it.
So its the bank's fault that inflation is so high but if inflation rates halve then it's all down to Sunak getting all the big calls right. The tories are hilarious
The other point of interest rate hikes is to insentivize savings, not just price consumers out of additional purchasing.
BUT THE BANKS ARENT DOING THAT! Apparently they can't afford to raise savings rates too much, but that doesn't seem to stop their record profits. Until the banks start to play ball with savings, inflation will be a problem.
Spot
on
Thank you channel 4 for speaking about this issue.
We all have to make difficult decisions when constipated
Life is about priorities, you have to decide whats most important to you.
This is worse than 1989 when the interest rate doubled.
I did a lot of research before buying my house in London. Typical 3-4 beds terraced houses in south london, even Putney area cost 80-90k back in 80~90s if I remember correctly, now they cost 1.2 million. 😮💨
You can blame wage rises and price rises and they do so because we're all poorer, but why should we accept to be poorer when we work hard for our money every day? It comes down to the government's missmanaging of the economy and they should find a way to recouperate the lost supply from brexit because it's not our fault.
Who is spending, where are these people, why don't I see it on the news how delighted the retail sector are about High Street spending. Channel 4 tell us - who? is spending.
It's cos Andrew Bailey doesn't know what he's doing. He should not be sitting at the head of bank of England. Get him out!
Big difference between expecting interest rates to come down than interest rates actually coming down.
The real problem is house prices, they’re currently between double to triple what they should be on the back of a decade and a half of ultra low interest rates. They need to allow the market to crash back to realistic valuations and not try and prop up the unsustainable with silly schemes as ultimately it’s unsustainable and will lead to a huge debt crisis like we’re probably at the beginning of now!
Everyone was believing interest rates would be ultra low forever and house prices could go endlessly up without serious long term consequences. We’re now realising this was a giant debt bubble that is going to implode, I see a historic crash on the horizon and it’s needed to restore balance, prices have been crazy for far too long.
The data shows the housing shortage issue is massively overplayed in the media too and with global populations heading for collapse in 20 years time it’s really not looking good for property investors.
prices won't go down because productive members of society have mortgages - and if their assets are totally wiped out and they are put in huge debt/can't move you trigger a massive walk out and 2008 on steroids!
at the same time we have a severe lack of housing so there is already too many people chasing not enough homes
its actually in almost everyone's interests for house prices to stabilize
Bank of England could back all these mortgages and maintain a fixed low rate.
Your missing the point, they want to cause pain so people have less money to spend which they hope will bring down inflation
People with incredibly high salaries telling people with normal salaries they are unsustainable is unsustainable.
It was worrying when the euro dollar inverted its even more worrying sitting on Housing, Car loan, Tech and Banking bubbles. All while being gaslit that we have too much money and too higher wages and not the unlimited greed from the wealthy and corporations being a problem.
Wage increases is causing inflation. The hot weather in Morocco is causing inflation. Anything but the cheap money being pumped in to the economy for +10 years by BoE causes inflation!
I wonder if Bailey and his cronies still got a nice salary bump up for all his efforts…
Bailey has a nerve on his salary. He needs to earn a lot less.
Perhaps start with the Premier Division. The Manager of Manchester City earns almost 40 times as much !
Not sure about UK but we also have corporations buying real estate in Canada and have the same disaster unfolding here.
What a nightmare !
For those blaming brexit - Germany is 6.1%, Italy 7.6%, austria 9% all are higher than ours
All falling...
@@hugorebelo129 just like our inflation will eventually fall
What is higher than UK? Latest inflation figures were 8,7% and BOE interest rate is way higher than ECB
But they dont have to pay extra few dozen of billions to import food which u didnt had to before brexit, thats why food prices will remain high even when inflation falls.
Imagine, a driver used to to a load in couple of day now it takes 2 weeks for the same load, that means extra mony in wages, more manpower, more taxes, etc thats extra cos that as always the consumer will have to fork out.
Thats what different then those other countries that uve mentioned
@@anonomous8719 when the internal consumption collapses, it will. and crash the economy in the process
Maybe UK should stop giving Ukraine billions and fix the economy first.
Dont people realise there is a submersible near the titanic that's exploded. Don't look here look over there
Its gunna be a very interesting few months/years
Guys 5% is still a VERY low rate. If you cannot pay this much of interest rates you shouldn't have bought a house in the first place. In fact, the bankers who granted these mortgages must be prosecuted. How is it possible that they gave someone a mortgage that with only 5% interest rate goes under the water?
No one envisaged gas and electricity going up £250 a month across the whole country which is the only thing causing inflation
This is actually a decent point.
This happens every 10-15 years. The only difference is on top of high interest rates (as found in the 1970s and 1990s) , the demand for housing keeps skyrocketing.
Isn't a definition of madness repeating the same thing over and over again but expecting a different result each time.
Paying the price for all that government spending + quantitative easing
Can someone explain to me how increasing interest rates will decrease inflation levels?
Genuine question if someone can please reply😂
Money that people spend on their mortgage etc is money they can't spend on other things. It's just an attempt to take money out of the economy
It doesn't work cause the inflation of UK have increase every day to be recession
@nialhutton
You can't buy stuff if you're skint. Raise interest rates, and most of the people buying stuff are skint, so they can't buy stuff.
When no one is buying, you lower the price to shift the stock. So prices come down. Production is usually cut too, because you're not selling. Which means lay offs, which means even more skint people, which lowers prices further.
The BoE is deliberately trying to cause a recession, and mass unemployment, to fix the problem they caused in 2008 when they lowered the rates to zero, and then forgot to increase them again (effectively leaving the printing press on for 15 years, and turning it up to 11 during the pandemic).
@@ghengisthegreat6133 good comments👍👏👏👏👏👏
Does the UK not have 30 year fixed mortgage loans?
nope...
Only 4% of the landmass of Britain is housing. 7% is owned by the monarchy, the largest family land owners in the world. What that got to do with anything? You're being manipulated. There's loads of land. Like seriously loads. 40% is unaccountable. Learn why?
“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.
The process engages all the hidden forces of economic law on the side of destruction,
and does it in a manner which not one man in a million is able to diagnose.”
John Maynard Keynes
Banks make vast profits, bankers get their bonuses, vote Tory everyone, it's going so well!
It doesn't matter which party is in charge, its just a different wolf in a different sheep's clothing. They'll still make all the promises and come through on very few of them
I have a good friend who was a very senior Investment banker. One year I asked about his bonus, he said it was huge.
However, he had little home life, was on call 24/7 and could be sent anywhere without notice. I wouldn't have wanted his job, the price was too high.
The major causes for inflation are corporate greed and brexit, not pay rise. Pay rise is the consequence for inflation and it is falling behind. So stop blaming it on ordinary people.
well looks like there is not a lot that can be done.
Oh it will.....for the RICH
Boris made PPE Billions then Liz made Trillions shorting the Market for the then Unelected chancellor who misled Parliament, but got elected ashe diny Party yet got as PM Fishy Rishy is here to Carve up the NHS . GOD HELP US.
You can starve to death and lose your house because that's the kind of PM I am. Wooo!
If you can change to interest only morgages to help home buyers atm ..
Ladies and gentlemen! It's all collapsing spectacularly...
Only stevie wonder didn't see this coming
@@johnhayes1635 All thanks to Tory voters
Wage increases the cause of inflation a Tory trope
Just take the banks extra 5 percent profit and share the pain and put the money into health. and inflation gos down and waiting lists too double whammy. or help the real bank (food banks )
If UK banks make more profit, they pay more tax which the Government spends on such things as the NHS.
It might stop house price inflation.
When the issue is on the supply side, hiking interest rates will not be as effective in bringing down inflation.
Seems if they make everything expensive nobody will have the disposable income to spend on anything other than essentials which will keep supermarkets happy but is a kick in the teeth for small businesses unfortunately 🇬🇧
No
Interest rate rises are inflationary, it’s more likely they contribute to it remaining high as business pass in the extra costs imposed on them
@@dc6807 that’s the point isn’t it, it’s the bank perpetuating the cycle .
And actually if you remember the bank admitted that raising rates would have this effect when they asked business not to passion the increased cost they’d just handed down to them ! Cheek of it
And also previously asked individuals not to ask for wage rises to cover the extra combined costs of rare rises, increased prices bcos of them and the artificially propped up by govt energy prices
Different planet these goons
@@dc6807 that’s give economic bullshit
If it ever applies(which is extremely doubtful but a as you say playbook answer like “maxed out the country’s credit card”, which is also nonsense) it has absolutely zero effect on supply side inflation. It has nothing to do with reducing spending power, people’s spending patterns (95% of people anyhow) are pretty much fixed bar eg a holiday. The root of these problems are high energy prices and food cost soaring along with supply chain issues post covid. None of these thing can you affect with rate rises. Generally people are already poorer and have already less disposable income bcos of these factors . By raising rates the govt have forced wage demands to increase as they’ve cleverly timed them for maximum kill alongside the propped up by govt energy price rip off.
This has, thanks to the govts inaction and the bank’s ineptitude turned from a temporary price shock into a major economic catastrophe for the country, though bank profits are up massively so the artificially boosts gdp along with the higher manufacturing costs adding to retail costs
Sorry GCE not give *
@@dc6807 also two of the countries least affected by those recent turmoil are Japan with zero% interest rates since 2016 and Switzerland with 1 % rates
Neither of these have gce playbook economics in place
For people to think low interest rates were going to remain forever was always foolhardy. Historically the rates are actually moving back to a more normal level. Banks have a lot to answer for here as clearly there has been very little stress testing of people’s ability to pay mortgages at higher and fundamentally more normal levels of interest. Additionally all of this has got to have an additional impact on the level of house building being carried out across the UK.
This Tory government has let Billions in fraud happen and aren't Pursuing the losses from the Tax Payers Treasury obvs not in public intrest wtf 😂 the Banks have said all the need to do is ask them as all accounts are available to be investigated .
In the past mortgages were only issued to reflect payments based on the mortgage being 3 times the applicant's income. Now it's up to 8.4 times. The market needs to reset even if it means people losing their houses and banks going bankrupt, that is the ultimate result in reckless banking behaviour as it was in 2008. The government has no mechanism or the resources to prop up the entire private property sector, it would take trillions of Pounds and our economy does not generate that kind of actual revenue. Not least because the real economy in the UK has been in recession for a decade, all the growth recorded is as a result of us using theoretical asset values as part of our GDP calculation. In reality our economy is no where near 5th largest in the World, it was when the Tories came to power but now I doubt it's in the top 10. Wait for the full effects of the Tory housing crash, watch how we drop down the list of economies as property prices fall.
So basically there is a major failure of leadership if the point of raising interest rates is to discourage profiteering and spending..... The whole point is to take money out of the economy....
Blaming it on the independent bank of England and calling the bank rubbish in the same interview. It just recks of only caring about not being blamed.
It's tough making money now and especially in stocks when institutional investors are the driving force behind the selling. I'm trying to avoid making any new buys at this point in order not to get sucked into a bear trap, tho I read an article of people that grossed profits over $150k this 2nd quarter, wondering what could be the best stocks to put on a watchlist for capital gains, both in a bull and bear market
Yes, tech, transportation, e-commerce, among other sectors, are expected to experience growth.
However, considering the recent surprises in the market, it's advisable to consult a financial advisor.
Their expertise is invaluable in navigating this storm and ensuring you make informed investment decisions.
@@emmabeyza6036I've not really considered financial advisors/portfolio managers but who would you recommend?
@@dilara4130I highly recommend considering my advisor, Joffrey Adam Smith, as your investment advisor.
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Brexit England fault for all this. U.K. deserves to financial suffer all the consequences
So brexit is also to blame for Germany 6.1% rate, irelands 6.6%, Italy 7.6%, Austria 9%? 🤣 grow up
If we deserve to suffer so does your country and every other country out there with a high inflation rate your comment is completely stupid and you're clearly uneducated.
@@anonomous8719 interest rates are coming down in Europe, Notice how it’s not coming down here. You’re a numpty if you think Brexit hasn’t fucked this country over.
4:35 And they still clap like seals 🤦🤦
He's 100% on what? The man is clueless.
It< makes sense, BTC and crypto is off helping to regulate, rather than pretend it won't ever happen. The big institutions getting in is the catalyst that will launch us into the stratosphere. Most people don't like change but after the change is made they grow used to it and it becomes a non issue usually because their fears never materialize. The projects that initiated the process of regulation have not been ruined, they got involved in setting guidelines and helping the regulators understand the crypto space. I’d get involved more knowing that I have made over 8.2 btc and 12ETH from day-trade with *Elizabeth* *Warran* *Jacob* Crypto in few weeks
The pump and dump has been a perfect eyeopener for us all to really see how unpredictable the market can be and the need for us to be trading not just seat and hodl.
Building a good investment portfolio is more complex so I would recommend you seek Elizabeth's support. This way you can get strategies designed to address your unique long/short-term goals and financial dreams
Knowledge still remains the greatest asset to succeed, I'm a great beneficiary of her signals, and I've been able to scale from 3 btc to 12.9 btc
BoE has been under constant pressure from No10 to keep rates insanely low since 2016, to try and mask the impacts of brexit and make us look more attractive for foreign business investment.
Sterling has fallen over 10% since the fatal Brexit Referendum. No Conservative or Labour politician mentions this. When the BoE mentions this, it is just ignored. Take this into account - inflation below 2% and no need for rate increases.
Please remember we voted for this, these are the consequences.
Corporate greed
ok, that beaded necklace look on a guy is just plain wrong
What has that got to do with the segment? You wouldn’t randomly say to him in the street if you saw him about his necklace. Keyboard warriors make me laugh so much 😂😂
Scotland and Wales need to free themselves from England!!