Inflation

[mangocrazy]

OK, so what is the 'ideal' level of interest rates? A level that does actually reward savers and keeps a lid on inflation, while not making borrowing stupidly expensive? Governments for the most part want rates low so they can borrow as much as they want with minimal penalty, but then that encourages everyone else to do the same and then rates have to go up anyway. I'd say an interest rate of 3-4% sounds like a reasonable compromise.

What say ye?

[gremlin]

OK, so what is the 'ideal' level of interest rates?

What say ye?

The ideal interest rate is the one that keeps inflation at the level deemed desirable. The theory is that higher interest pinches spending, lower rates stimulate it. Rates are the tool that provides the fix, according to the experts.

As with all things macro economic, the efficacy can be debated to death, and there are many other factors at play.

Interestingly, Japan has just ended the longest period of negative central bank rates in history. 16 years, iirc.

[Yorick]

OK, so what is the 'ideal' level of interest rates?

What say ye?

The ideal interest rate is the one that keeps inflation at the level deemed desirable. The theory is that higher interest pinches spending, lower rates stimulate it. Rates are the tool that provides the fix, according to the experts.

As with all things macro economic, the efficacy can be debated to death, and there are many other factors at play.

Interestingly, Japan has just ended the longest period of negative central bank rates in history. 16 years, iirc.

Stop talking sense.
The knobhead experts know far more than you

[Yambo]

The ideal interest rate is the one that keeps inflation at the level deemed desirable. The theory is that higher interest pinches spending, lower rates stimulate it. Rates are the tool that provides the fix, according to the experts.

As with all things macro economic, the efficacy can be debated to death, and there are many other factors at play.

Ol' Recep here in Turkey pooh poohs that theory, or his guru does. The local evidence would suggest that he hasn't got a clue as despite the recent interest rate hikes (I'm getting 42% on a fixed term deposit account) inflation is still high and shows no signs of decreasing. That 42% interest is wiped out by the current inflation so the money will be spent soon, it's pointless saving at times like this.

I guess the money markets simply don't trust Recep to allow the higher interest rates to work. The Central Bank president Hafize Erkan resigned after not long in the post and one wonders if Recep was giving her a hard time over the interest rate rises.

There are local elections here at the end of the month. If the AKP (Recep's party) are not successful I guess Şimşek wıll be sacked from his Finance Minister job. If the AKP do well I can see the £/TL exchange rate hitting 50 TL.(currently around 41 to the pound). It will be interesting for some whichever way it goes.

The economy doesn't seem to be as big an influence on elections here as it does in UK.

[Cousin Jack]

Someone on Radio 4 a day or two ago finally pointed out that 4 - 6% is actually normal and anything below 3% is abnormal.

Long may normality reign.

[gremlin]

It doesn't help when the mass media (BBC in particular) constantly tell us the it's the highest that Base has been for over fifteen years. This is the same BBC that for the last 15 years told us it was an economic crisis to have Base at 25bp.

Today's headlines, tomorrow's fish and chip wrapping.

[gremlin]

Someone on Radio 4 a day or two ago finally pointed out that 4 - 6% is actually normal and anything below 3% is abnormal.

Long may normality reign.

My humble opinion, as very much a lower-middle management bod in a niche bank, is that central banks love to give the image that they are in control, and I suppose they are, inasmuch as a skipper of a ship is at the wheel of a ship being tossed around in a force 10 gale. At best reactionary to events, and making the most of any spells of clear weather to impart a sense of being in command, before being tossed into the maelstrom once again and hoping for the best. Not ideal, but who would you rather have at the wheel? A skipper in possession of the charts and a compass with a training in maritime navigation, or a landscape gardener?

Also, think of the shit storm that's impacted the markets* in the last couple of decades: the collapse of venerable banking institutions due to criminally negligent management, a resulting credit crunch, a global pandemic, huge shifts in the geo-political landscape, a war in Europe's back garden and troublesome militias disrupting global shipping. All of this impacts national and supranational economies, and really all the Bank of England can do is tinker with rates**.


*By the grandiose term 'the markets', I mean of course, virtually everybody on the planet.

**Or print a shit ton of extra cash, but we know that's not a very smart move. Leave that to small scale counterfeiters.

[Count Steer]

Someone on Radio 4 a day or two ago finally pointed out that 4 - 6% is actually normal and anything below 3% is abnormal.

Long may normality reign.

Also, think of the shit storm that's impacted the markets* .......


*By the grandiose term 'the markets', I mean of course, virtually everybody on the planet.

I thought 'the market' was an evil, deep state operation that conspired to ruin Liz Truss's genius economic plans.

Always makes me laugh when people refer to 'the market' like there's some controlling intelligence behind it.

[Mr. Dazzle]

[cheb]

Someone on Radio 4 a day or two ago finally pointed out that 4 - 6% is actually normal and anything below 3% is abnormal.

Long may normality reign.

My humble opinion, as very much a lower-middle management bod in a niche bank, is that central banks love to give the image that they are in control, and I suppose they are, inasmuch as a skipper of a ship is at the wheel of a ship being tossed around in a force 10 gale. At best reactionary to events, and making the most of any spells of clear weather to impart a sense of being in command, before being tossed into the maelstrom once again and hoping for the best. Not ideal, but who would you rather have at the wheel? A skipper in possession of the charts and a compass with a training in maritime navigation, or a landscape gardener?

Also, think of the shit storm that's impacted the markets* in the last couple of decades: the collapse of venerable banking institutions due to criminally negligent management, a resulting credit crunch, a global pandemic, huge shifts in the geo-political landscape, a war in Europe's back garden and troublesome militias disrupting global shipping. All of this impacts national and supranational economies, and really all the Bank of England can do is tinker with rates**.


*By the grandiose term 'the markets', I mean of course, virtually everybody on the planet.

**Or print a shit ton of extra cash, but we know that's not a very smart move. Leave that to small scale counterfeiters.

There was a joke doing the rounds after one of the crashes, something like this: Who's the odd one out: Gordon Brown, Alistair Darling or Terry Wogan?

Wogan, he's the only one with a banking qualification.

[ZRX61]

Over here, Biden continues to blather on about *core inflation* being lower...

Core inflation doesn't include food & energy prices...

[MyLittleStudPony]

I've seen a twitch of life in the old bond markets. The first I've seen for some time. My guess is that interest rates will not come down as soon or by as much as had been expected.

[irie]

I've seen a twitch of life in the old bond markets. The first I've seen for some time. My guess is that interest rates will not come down as soon or by as much as had been expected.

That is exactly what the overwhelming majority of economic commentators are publicly saying.

[JackyJoll]

I've seen a twitch of life in the old bond markets. The first I've seen for some time. My guess is that interest rates will not come down as soon or by as much as had been expected.

Super timing by me then, getting out of bonds last Monday.

[Mr. Dazzle]

Rates went up on several of my savings products this week.

0.02% up, but it was up

[MyLittleStudPony]

I've seen a twitch of life in the old bond markets. The first I've seen for some time. My guess is that interest rates will not come down as soon or by as much as had been expected.

That is exactly what the overwhelming majority of economic commentators are publicly saying.

That would be ideal for me. At least for the next 18 months or so.

Ideally house prices will not start to rise for a similar amount of time. That may be too much to hope for

[irie]

I've seen a twitch of life in the old bond markets. The first I've seen for some time. My guess is that interest rates will not come down as soon or by as much as had been expected.

That is exactly what the overwhelming majority of economic commentators are publicly saying.

That would be ideal for me. At least for the next 18 months or so.

Ideally house prices will not start to rise for a similar amount of time. That may be too much to hope for

"Ideally house prices will not start to rise" for "at least for the next 18 months or so"?

[Mr. Dazzle]

Just had a look myself, there are at least a dozen banks offering more than 5% now I can see on my platform...best one is 5.16% AER on 1 year fixed deposits.

Mrs. D was on about buying some Premium Bonds, I think you'd/she'd be daft to do that if you can get those ^ rates on an ISA - which she can.

[Mr. Dazzle]

A very small chance

Lottery player's logic innit. I don't do that either...well, not unless it's over a hundo mil.

Flip side is you might also get buggery nothing on the PBs, whereas the ISA money is guaranteed.

[Dodgy69]

even the little wins are nice.