Raising interest rates COULD make inflation rise

[hyperD]

Saying bye bye to the horn of plenty, we can safely assume that all this talk of "measures" is just rearranging the deckchairs on the Titanic.

As the late Private James Frazer used to say: "We're dooomed!".

[Peoplesoft bloke]

There is a big difference between people wanting a pay rise and getting one. We abolished any kind of chance of most workers wielding any kind of power over what they get paid in the 80s by popular consent and the aspirational illusion that everyone would benefit. Apart from a few top execs (who already get inflation-busting increases year-on-year) no-one is going to get pay rises even approaching staying neutral in real terms, so this is never going to happen.

[TimberWolf]

Isn't it more a case that in the unlikely event interest rates do go up, it'll be by 0.0000000000000000001%? More likely is more printing. At some stage savers are going to run out of money though.

[DimPrawn]

Interest rate rise could push inflation higher, warns Item - Telegraph

With the headline rate of inflation double the target at 4pc, many in the markets believe the Bank of England could raise rates from their record low as soon as next month, in a bid to rein in rising prices.

However, doing so risks triggering the feared "wage price spiral", the vicious circle where attempts to keep people's pay in line with rising prices push inflation even higher, Item has argued.

The knock-on effect of a rate rise on mortgage payments, as well as putting pressure on households, could force wages to finally start climbing at the wrong time, the group of economists fears.



Eh?

So, inflation is high, raise interest rates means people's mortgage payments go up, so they want a pay rise, so this fuels inflation etc.

What utter bollox.

By this measure we should print everyone a billion pounds each, we'd all be rich and wouldn't need pay rises, so inflation would fall to zero.

Logic worthy of the tag Cretin and Village Idiot.