Bank of England Base rate & other news

[JustKeepSwimming]

Taxation of whom? the wealthy? businesses? Taxation typically increases costs along the chain as the extra cut is passed down, how is that supposed to slow down price increases?

Why assume only taxation up? You can reduce taxation on supply side. Increase on the demand side. Immediate effect, fairer distribution of pain, encouraging supply side expansion.

Instead we have rates rising which contracts supply side, disproportionately impacts the young and benefits the old, and takes over a year before any real impact.

[TheDude]

Bad news for those with multiple mortgages...

[dsc]

Why assume only taxation up? You can reduce taxation on supply side. Increase on the demand side. Immediate effect, fairer distribution of pain, encouraging supply side expansion.
Instead we have rates rising which contracts supply side, disproportionately impacts the young and benefits the old, and takes over a year before any real impact.

So how exactly would this work in real life? tax whom and lower taxes for whom exactly? Interest rates are lowering demand as loads of people can't afford a mortgage now or don't even want to take one as it's too expensive, so if they can they will try to wait it out. The ones with a mortgage already will have less money to spend which should lower demand for, well most things and those who have cash can save instead as you can earn more now with higher rates, so again demand will drop.

[Protagoras]

Saving rates might have been low but asset prices ballooned.

Certainly the price of property assets increased, and the government missed a great chance to apply a 'windfall tax' to those who benefited through no effort of their own.

Such taxes could have been used to build affordable rented housing.

[JustKeepSwimming]

So how exactly would this work in real life? tax whom and lower taxes for whom exactly? Interest rates are lowering demand as loads of people can't afford a mortgage now or don't even want to take one as it's too expensive, so if they can they will try to wait it out. The ones with a mortgage already will have less money to spend which should lower demand for, well most things and those who have cash can save instead as you can earn more now with higher rates, so again demand will drop.

Interest rates aren't lowering demand, more people gain with rate rises than lose. Mortgaged homeowners not fixed is the minority. Even those fixed is still the minority.

Someone not being able to afford to buy a house has no impact on inflation.

When interest rates are below inflation people do not save, they spend.

You're literally trying to claim something that the evidence, by way of inflation figures, shows isn't true. Service and goods have increased, not reduced. It's only energy prices that are asserting any sort of downward pressure on inflation.

Raise VAT, raise all bands. Raise/reduce rates/allowances on investments.

[JustKeepSwimming]

Certainly the price of property assets increased, and the government missed a great chance to apply a 'windfall tax' to those who benefited through no effort of their own.

Such taxes could have been used to build affordable rented housing.

All asset prices ballooned. FTSE 100 doubled, FTSE 250 tripled. Dow quadrupled, S&P quintupled.

[dsc]

Interest rates aren't lowering demand, more people gain with rate rises than lose.[...][...]Raise VAT, raise all bands. Raise/reduce rates/allowances on investments.

But you just said interest rate increases are wrecking it for loads of people? also how is increasing VAT not going to affect prices?

[JustKeepSwimming]

But you just said interest rate increases are wrecking it for loads of people? also how is increasing VAT not going to affect prices?

Rate rises are hurting the young disproportionately. A generation that has taken an unfair amount of tulip for the benefit of older generations. Delaying a career/house might not impact real time economic metrics, but it does impact the individual life.

VAT does not cause inflation, basically the increase is offset by reduced profit margins and/or increase economies of scale.

[Protagoras]

Interest rates aren't lowering demand, more people gain with rate rises than lose. Mortgaged homeowners not fixed is the minority. Even those fixed is still the minority.

Reportedly, there's a greater use of fixed-term retail debt than was the case last time inflation was out of hand.
This should imply that interest rates as an inflation-reducing tool will be less effective, taking longer to impact demand. I wonder if this means that we'll see a period of prolonged higher rates than folks have been used to in the last 15 years.

It's not just younger people with mortgages who are impacted negatively by rate rises, though. Older folks' pension funds are impacted as the asset bubbles deflate. This also works to reduce demand as folks save more / spend less to compensate. Even many with DB pension schemes have annual rises capped at 5% so won't keep up with inflation.

[malvolio]

Rate rises are hurting the young disproportionately. A generation that has taken an unfair amount of tulip for the benefit of older generations. Delaying a career/house might not impact real time economic metrics, but it does impact the individual life.

VAT does not cause inflation, basically the increase is offset by reduced profit margins and/or increase economies of scale.

Nope, read that four times, it still makes no sense...