What are the dangers of inflation if the BoE doesn't raise rates?

[Greater Fool]

23 minutes ago, Fred1981 said:

What's WSB?

Wallstreetbeats subreddit I think, that GameStop shares nonsense.

[Flat Bear]

6 hours ago, locky82 said:

Why is a sterling crisis inevitable? 

 

6 hours ago, Gribble said:

Whatever happens to inflation the Gov would not let the BoE raise interest rates hugely. Would be political suicide as so unpopular for mortgage holders. No the Gov will prefer a severe Sterling crisis which is now inevitable 

 

6 hours ago, locky82 said:

Why is a sterling crisis inevitable? 

This is an interesting thread

Sunak seemed very calm and collected dodging all Andrew Neil’s questions last week. I have been told he is very financially savvy? so he must know something I am unaware of, mustn't he?

I think we are asking the right questions but not necessarily coming up with the more likely conclusions.

Firstly, Interest rates are raised to defend a currency, lowering would weaken it.

Yes it is different this time. It is always different every time but the fundamental laws of economics physics still apply.

There is some truth in that it is in the interest of government(s) at this time to keep borrowing as low as possible for as long as possible so it is likely we will see base rate rises lag well behind inflation rates Mortgage rates will be encouraged to be risen to try and stem debt so the banks will be in a very profitable position for a short period.

"Whatever happens in the US will happen here 6 months later". My late father’s saying. I doubt this is always exactly true  but when it comes to financials it is invariably true give a few months either side. Interest rates are 5% in the states and likely to double to 10% by year end. The BOE interest rate has normally been a percentage point or more above the US and there is no reason to believe it will not continue.

A good question would be how far can inflation (real) rise before the BOE has to raise the base rate? They will, I am sure, try to have some sort of 2 tier base rate, one for their QEing and one as a lender of last resort. 

Ultimately it will not be the BOE or even the UK government who will make the decision to raise rates it will be the Federal reserve, because what ever they do we are forced to follow. It has always been so.

Depends what you mean by inflation? Another good question. We all know the BOE have been manipulating their measure of inflation for a long time. Omitting house prices from the figures? The largest and most important purchase in most of our lifetimes, it really is ridiculous.

But I suppose certain price rises are more important than others and deflation in some areas will offset inflation in others.

It is like saying the definition of an alcoholic is someone who consumes a lot of alcohol. We know this is not true as you can have a very very, heavy social drinker who may consume several times more than the “recommended” intake but it does not make them an alcoholic. You can have someone who drinks very little but IS an alcoholic. The answer is in control and whether they are addicted and unable to control their intake. So inflation that is not controllable and affects the economy as a whole is more important, to the rate setters and global markets anyway.

  

 

 

 

[24gray24]

4 minutes ago, Flat Bear said:

 

 

This is an interesting thread

Sunak seemed very calm and collected dodging all Andrew Neil’s questions last week. I have been told he is very financially savvy? so he must know something I am unaware of, mustn't he?

I think we are asking the right questions but not necessarily coming up with the more likely conclusions.

Firstly, Interest rates are raised to defend a currency, lowering would weaken it.

Yes it is different this time. It is always different every time but the fundamental laws of economics physics still apply.

There is some truth in that it is in the interest of government(s) at this time to keep borrowing as low as possible for as long as possible so it is likely we will see base rate rises lag well behind inflation rates Mortgage rates will be encouraged to be risen to try and stem debt so the banks will be in a very profitable position for a short period.

"Whatever happens in the US will happen here 6 months later". My late father’s saying. I doubt this is always exactly true  but when it comes to financials it is invariably true give a few months either side. Interest rates are 5% in the states and likely to double to 10% by year end. The BOE interest rate has normally been a percentage point or more above the US and there is no reason to believe it will not continue.

A good question would be how far can inflation (real) rise before the BOE has to raise the base rate? They will, I am sure, try to have some sort of 2 tier base rate, one for their QEing and one as a lender of last resort. 

Ultimately it will not be the BOE or even the UK government who will make the decision to raise rates it will be the Federal reserve, because what ever they do we are forced to follow. It has always been so.

Depends what you mean by inflation? Another good question. We all know the BOE have been manipulating their measure of inflation for a long time. Omitting house prices from the figures? The largest and most important purchase in most of our lifetimes, it really is ridiculous.

But I suppose certain price rises are more important than others and deflation in some areas will offset inflation in others.

It is like saying the definition of an alcoholic is someone who consumes a lot of alcohol. We know this is not true as you can have a very very, heavy social drinker who may consume several times more than the “recommended” intake but it does not make them an alcoholic. You can have someone who drinks very little but IS an alcoholic. The answer is in control and whether they are addicted and unable to control their intake. So inflation that is not controllable and affects the economy as a whole is more important, to the rate setters and global markets anyway.

  

 

 

 

Hasn't the federal reserve said they're not going to raise interest rates for a while, until the unemployment has gone down? 

So that means they're going to let inflation rip (or be temporary) for at least a year. 

So how high is it going to go, given that inaction? 

What are the traditional leading indicators. Commodities? What are they showing?

And is there any indication mortgage spreads are rising (at government behest) even though base rates remain the same?

[erat_forte]

21 minutes ago, Flat Bear said:

... but the fundamental laws of economics physics still apply....

Now this is where I think the key is, I think that the money economy and the physical economy have been diverging. Credit expansion led to the 2008 crash, so was replaced / added to by monetary expansion after that. Seems to me like that has finally run out of steam as well.

The real physical economy seems to be flatlining if not starting to turn down in the 12 months before covid came along - I think the restrictions and sloganeering around covid have definitely hidden a second GFC which would likely have hit in 2020. I have no time for covid conspiracies but I think it was simply incredibly good luck for the government and banks, giving them a couple of years breathing room.

Seems obvious to me that the options are either crash the economy by allowing massive deleveraging, (remember how QE was meant to be temporary, the extra magic money would be destroyed? That's as big a fantasy that debt will be repayed)

Or come up with a new "scheme" to keep the plates spinning, after credit and then monetarism have both run out of steam.

[Si1]

Just now, erat_forte said:

Now this is where I think the key is, I think that the money economy and the physical economy have been diverging. Credit expansion led to the 2008 crash, so was replaced / added to by monetary expansion after that. Seems to me like that has finally run out of steam as well.

The real physical economy seems to be flatlining if not starting to turn down in the 12 months before covid came along - I think the restrictions and sloganeering around covid have definitely hidden a second GFC which would likely have hit in 2020. I have no time for covid conspiracies but I think it was simply incredibly good luck for the government and banks, giving them a couple of years breathing room.

Seems obvious to me that the options are either crash the economy by allowing massive deleveraging, (remember how QE was meant to be temporary, the extra magic money would be destroyed? That's as big a fantasy that debt will be repayed)

Or come up with a new "scheme" to keep the plates spinning, after credit and then monetarism have both run out of steam.

Or a new economic paradigm...

[Flat Bear]

32 minutes ago, 24gray24 said:

Hasn't the federal reserve said they're not going to raise interest rates for a while, until the unemployment has gone down? 

So that means they're going to let inflation rip (or be temporary) for at least a year. 

So how high is it going to go, given that inaction? 

What are the traditional leading indicators. Commodities? What are they showing?

And is there any indication mortgage spreads are rising (at government behest) even though base rates remain the same?

Latest Fed forecast is just 2 rate rises by 2023. The "spike" is only transitory and temporary and inflation will get back to normal within...... a few years. 3 TO 4% inflation can easily be tolerated. Exactly as you say

BUT

Biden has announced massive “stimulus" programme

There is a shortage of labour throughout the US. People are not returning back to work.

There are price rises across all sectors

There are shortages with demand far exceeding supply 

Current interest payment is 378billion with 10 year bonds at 2.2%

So do you think it is possible they are right? Do you really believe they are in control? Do you think, just maybe, they are way behind the curve and have their heads stuck in the sand?

Genuine question. If you think so I will take it on board, I am often wrong.

 

[Fred1981]

1 hour ago, Tiger131 said:

Wallstreetbeats subreddit I think, that GameStop shares nonsense.

Thanks

[Si1]

Roger the Dodger says interest rates need to start being raised right now:

https://www.telegraph.co.uk/business/2021/06/20/raise-rates-now-stave-economic-nightmare/

"through higher taxes. This would be seriously unpopular, as well as damaging to the economy’s long-term growth prospects. This is not an appealing prospect. In any case, what is currently out of kilter? The answer is surely not tax rates but interest rates.

 

In this country, official interest rates are currently at 0.1pc, the level to which they were cut in March 2020 in response to the weakness of the economy brought on by the pandemic and measures to counter it. Even before this emergency measure, interest rates were only at 0.75pc. Now that the economy is within sight of returning to the pre-Covid level of output and looks to have considerable momentum beyond that point, what is the justification for carrying on with official interest rates at almost zero.

 

Proceeding in small steps, rates should be increased, first to 0.75pc, and then subsequently to something like 2pc-3pc. The time to start such a move is now."

[Si1]

And if they don't then they'll have to raise them more, later, and crash the economy.

One guess as to what they'll actually do....

[rantnrave]

2 hours ago, Flat Bear said:

 

 

This is an interesting thread

Sunak seemed very calm and collected dodging all Andrew Neil’s questions last week. I have been told he is very financially savvy? so he must know something I am unaware of, mustn't he?

I think we are asking the right questions but not necessarily coming up with the more likely conclusions.

Firstly, Interest rates are raised to defend a currency, lowering would weaken it.

Yes it is different this time. It is always different every time but the fundamental laws of economics physics still apply.

There is some truth in that it is in the interest of government(s) at this time to keep borrowing as low as possible for as long as possible so it is likely we will see base rate rises lag well behind inflation rates Mortgage rates will be encouraged to be risen to try and stem debt so the banks will be in a very profitable position for a short period.

"Whatever happens in the US will happen here 6 months later". My late father’s saying. I doubt this is always exactly true  but when it comes to financials it is invariably true give a few months either side. Interest rates are 5% in the states and likely to double to 10% by year end. The BOE interest rate has normally been a percentage point or more above the US and there is no reason to believe it will not continue.

A good question would be how far can inflation (real) rise before the BOE has to raise the base rate? They will, I am sure, try to have some sort of 2 tier base rate, one for their QEing and one as a lender of last resort. 

Ultimately it will not be the BOE or even the UK government who will make the decision to raise rates it will be the Federal reserve, because what ever they do we are forced to follow. It has always been so.

Depends what you mean by inflation? Another good question. We all know the BOE have been manipulating their measure of inflation for a long time. Omitting house prices from the figures? The largest and most important purchase in most of our lifetimes, it really is ridiculous.

But I suppose certain price rises are more important than others and deflation in some areas will offset inflation in others.

It is like saying the definition of an alcoholic is someone who consumes a lot of alcohol. We know this is not true as you can have a very very, heavy social drinker who may consume several times more than the “recommended” intake but it does not make them an alcoholic. You can have someone who drinks very little but IS an alcoholic. The answer is in control and whether they are addicted and unable to control their intake. So inflation that is not controllable and affects the economy as a whole is more important, to the rate setters and global markets anyway.

  

 

 

 

I don't agree that the UK automatically follows the Fed. When several US rises pushed rates above 2% a couple of years ago, we managed one rise up to 0.75% before cutting again. This view that we will copy whatever the US does re interest rates is posted a lot on this site, which is surprising given that the most recent examples do not back this up.

[24gray24]

1 hour ago, Flat Bear said:

Latest Fed forecast is just 2 rate rises by 2023. The "spike" is only transitory and temporary and inflation will get back to normal within...... a few years. 3 TO 4% inflation can easily be tolerated. Exactly as you say

BUT

Biden has announced massive “stimulus" programme

There is a shortage of labour throughout the US. People are not returning back to work.

There are price rises across all sectors

There are shortages with demand far exceeding supply 

Current interest payment is 378billion with 10 year bonds at 2.2%

So do you think it is possible they are right? Do you really believe they are in control? Do you think, just maybe, they are way behind the curve and have their heads stuck in the sand?

Genuine question. If you think so I will take it on board, I am often wrong.

 

No, I think they've made a political decision to erode debts through inflation for a while. 

they've chosen inflation (collapse )rather than deflationary (collapse). 

For a while. 

[Flat Bear]

38 minutes ago, rantnrave said:

I don't agree that the UK automatically follows the Fed. When several US rises pushed rates above 2% a couple of years ago, we managed one rise up to 0.75% before cutting again. This view that we will copy whatever the US does re interest rates is posted a lot on this site, which is surprising given that the most recent examples do not back this up.

Up until the last few years there has been proportionalely higher interest rates in the UK compared with US

You are right this is theorectically not an automatic thing but when the US starts to tighten the BOE will have no choice unless they want to see a weakening of sterling and thus higher inflation still

 

What Was the Interest Rate Then?

Download the Results in a Spreadsheet Format

Year	UK Short-Term Rate: Ordinary Funds, Contemporary Series	UK Short-Term Rate: Ordinary Funds, Consistent Series	UK Short-Term Rate: Surplus Funds, Contemporary Series	UK Short-Term Rate: Surplus Funds, Consistent Series	UK Long-Term Rate: Contemporary Series	UK Long-Term Rate: Consistent Series
1988	9.80	9.80	10.33	10.33	8.52	8.52
1989	13.28	13.28	13.89	13.89	8.39	8.39
1990	14.09	14.09	14.77	14.77	9.73	9.73
1991	10.82	10.82	11.52	11.52	9.16	9.16
1992	8.94	8.94	9.62	9.62	8.79	8.79
1993	5.21	5.21	5.94	5.94	8.06	8.06
1994	5.15	5.15	5.50	5.50	7.83	7.83
1995	6.33	6.33	6.68	6.68	8.09	8.09
1996	5.78	5.78	6.03	6.03	8.15	8.15
1997	6.48	6.48	6.83	6.83	6.99	6.99
1998	6.82	6.82	7.34	7.34	5.33	5.33
1999	5.04	5.04	5.45	5.45	4.51	4.51
2000	5.80	5.80	6.11	6.11	4.42	4.42
2001	4.76	4.76	4.97	4.97	4.67	4.67
2002	3.86	3.86	3.99	3.99	4.75	4.75
2003	3.56	3.56	3.67	3.67	4.64	4.64
2004	4.44	4.44	4.58	4.58	4.69	4.69
2005	4.55	4.55	4.69	4.69	4.33	4.33
2006	4.65	4.65	4.80	4.80	4.17	4.17
2007	5.53	5.53	5.96	5.96	4.56	4.56
2008	4.32	4.32	5.50	5.50	4.66	4.66
2009	0.53	0.53	1.19	1.19	4.45	4.45
2010	0.50	0.50	0.69	0.69	4.47	4.47
2011	0.48	0.48	0.89	0.89	4.04	4.04
2012	0.31	0.31	0.84	0.84	3.08	3.08
2013	0.30	0.30	0.49	0.49	3.42	3.42
2014	0.38	0.38	0.54	0.54	3.27	3.27
2015	0.44	0.44	0.55	0.55	2.54	2.54
2016	0.32	0.32	0.49	0.49	2.04	2.04
2017	0.29	0.29	0.36	0.36	1.92	1.92
2018	0.60	0.60	0.72	0.72	1.90	1.90
2019	0.00	0.00	0.81	0.81	1.43	1.43
2020	0.00	0.00	0.29	0.29	0.82	0.82

Year	US Short-Term Rate: Ordinary Funds, Contemporary Series	US Short-Term Rate: Ordinary Funds, Consistent Series	US Short-Term Rate: Surplus Funds, Contemporary Series	US Short-Term Rate: Surplus Funds, Consistent Series	US Long-Term Rate: Contemporary Series	US Long-Term Rate: Consistent Series
1988	6.67	6.67	7.57	7.57	9.71	9.71
1989	8.11	8.11	9.21	9.21	9.26	9.26
1990	7.50	7.50	8.10	8.10	9.32	9.32
1991	5.38	5.38	5.69	5.69	8.77	8.77
1992	3.43	3.43	3.52	3.52	8.14	8.14
1993	3.00	3.00	3.02	3.02	7.22	7.22
1994	4.25	4.25	4.21	4.21	7.97	7.97
1995	5.49	5.49	5.83	5.83	7.59	7.59
1996	5.01	5.01	5.30	5.30	7.37	7.37
1997	5.06	5.06	5.46	5.46	7.27	7.27
1998	4.78	4.78	5.35	5.35	6.53	6.53
1999	4.64	4.64	4.97	4.97	7.05	7.05
2000	5.82	5.82	6.24	6.24	7.62	7.62
2001	3.40	3.40	3.88	3.88	7.08	7.08
2002	1.61	1.61	1.67	1.67	6.49	6.49
2003	1.01	1.01	1.13	1.13	5.66	5.66
2004	1.37	1.37	1.35	1.35	5.63	5.63
2005	3.15	3.15	3.22	3.22	5.23	5.23
2006	4.73	4.73	4.97	4.97	5.59	5.59
2007	4.36	4.36	5.02	5.02	5.56	5.56
2008	1.37	1.37	1.92	1.92	5.63	5.63
2009	0.15	0.15	0.16	0.16	5.31	5.31
2010	0.14	0.14	0.18	0.18	4.94	4.94
2011	0.05	0.05	0.10	0.10	4.64	4.64
2012	0.09	0.09	0.14	0.14	3.67	3.67
2013	0.06	0.06	0.11	0.11	4.23	4.23
2014	0.03	0.03	0.09	0.09	4.16	4.16
2015	0.05	0.05	0.13	0.13	3.89	3.89
2016	0.32	0.32	0.39	0.39	3.67	3.67
2017	0.93	0.93	1.00	1.00	3.74	3.74
2018	1.94	1.94	1.83	1.83	3.93	3.93
2019	2.06	2.06	2.16	2.16	3.39	3.39
2020	0.35	0.35	0.37	0.37	2.48	2.48

 

Please read our Note on Data Revisions.

These data may be used for non-profit educational purposes if proper credit is given. You need not ask for permission. If you need to publish a table of more than five consecutive years of these data in electronic or print documents, we ask that you contact us first. If you are using these data in a document for profit purpose, we expect to be cited and that the user will make a donation to our cite. Anyone is allowed to publish electronic links to these data.

Citation

Lawrence H. Officer, "What Was the Interest Rate Then?" MeasuringWorth, 2021
URL: http://www.measuringworth.com/interestrates/

 

Up until the last few years there has been proportionately higher interest rates in the UK compared with US

You are right this is theoretically not an automatic thing but when the US starts to tighten the BOE will have no choice unless they want to see a weakening of sterling and thus higher inflation still

 

 

[Flat Bear]

A couple of charts to remind us of where we are

 

 

 

[Flat Bear]

26 minutes ago, 24gray24 said:

No, I think they've made a political decision to erode debts through inflation for a while. 

they've chosen inflation (collapse )rather than deflationary (collapse). 

For a while. 

Yes I understand what they would like to do, and yours is the concensus view.

But do you think they will be able to do it?

I may have thought it possible 3 or 4 years ago but I think the shear amount of debt is too much and they are at a dead end  with no way out, I am not sure they realize it yet. 

I do not have as much faith as you in their competence but I hope you/they are right.

[Speed1987]

There's a clear trend there, since 1988 interest rates have gone one way, down.

If that trend is to continue, I would expect negative rates soon.

Once the current boom dies off and there are less mortgages being granted. I suspect they will move to negative rates as a new way to boost the market.

If coronavirus is seasonal, currently all looks well and vaccines are a success from the public perception.

However if vaccine efficency isn't very great (which I belive) or a new strain emerges. Then they'll pull the trigger. I guess around September time we will know more.

[Flat Bear]

4 hours ago, spyguy said:

People get less for their money.

Imports cost more.

 

According to the 2016-17 survey, 14.4 million households either own their home outright or own with a mortgage, making up 63 percent of all English households. Of those owner-occupiers, 34 percent own their home outright with 28 percent having an outstanding mortgage.

 

Apart from those "downsizing" all new entrance need a mortgage to buy property.

Without a supply of cheap affordable mortgages all property prices fall in value. People are not immune because they do not have a mortgage, I know you must know this.

So around a half of freehold homes have a mortgage with a high proportion with high loan to value.

IF prices fell in absolute terms the "owners" lose their equity or part of their equity and the banks own a bigger share. As long as any absolute falls keep the value of the property above the outstanding loan amount the banks do not lose money, so no problem there, for the banks at least.

At 60% loan to value the bank can fell quite reassured. At 10% they will be nervous and expect much higher interest (risk money)

It is unlikely prices will fall 30% in absolute terms even in the worst case scenario so banks will be OK and losses will be small.

 

[Flat Bear]

5 hours ago, spyguy said:

Very few houses have mortgages on them - 30% ish.

Of those, less than half will have v little mortgage.

 

Quoted wrong reply above

[Flat Bear]

5 hours ago, spyguy said:

Very few houses have mortgages on them - 30% ish.

Of those, less than half will have v little mortgage.

 

Quoted wrong reply above

[spyguy]

2 hours ago, rantnrave said:

I don't agree that the UK automatically follows the Fed. When several US rises pushed rates above 2% a couple of years ago, we managed one rise up to 0.75% before cutting again. This view that we will copy whatever the US does re interest rates is posted a lot on this site, which is surprising given that the most recent examples do not back this up.

To all intents they do-

https://d3fy651gv2fhd3.cloudfront.net/embed/?s=ukbrbase&v=202106182315V20200908&d1=19960626&title=false&url2=/united-states/interest-rate&h=300&w=600

[Flat Bear]

36 minutes ago, Speed1987 said:

There's a clear trend there, since 1988 interest rates have gone one way, down.

If that trend is to continue, I would expect negative rates soon.

Once the current boom dies off and there are less mortgages being granted. I suspect they will move to negative rates as a new way to boost the market.

If coronavirus is seasonal, currently all looks well and vaccines are a success from the public perception.

However if vaccine efficency isn't very great (which I belive) or a new strain emerges. Then they'll pull the trigger. I guess around September time we will know more.

[spyguy]

Just now, spyguy said:

To all intents they do-

https://d3fy651gv2fhd3.cloudfront.net/embed/?s=ukbrbase&v=202106182315V20200908&d1=19960626&title=false&url2=/united-states/interest-rate&h=300&w=600

 

5 minutes ago, Flat Bear said:

Quoted wrong reply above

I've not found a good source for average outstanding.

Looking at the 'mortgage prisoner' stories that are still cropping up 13 years after 2008, theres still a lit of idiots with IOs who managed to pay fall off.

Insane.

Equally, looking at NW figures, their mortgage book is falling.

I know several families where I suspect either no capital has been paid or equity has been withdrawn. I know the jobs they do n pay, and theres a massive gap between spend n income.

I've seen few suddenly leave, with nothing to show for 15y of mortgage payments.

 

 

[spyguy]

38 minutes ago, Speed1987 said:

There's a clear trend there, since 1988 interest rates have gone one way, down.

If that trend is to continue, I would expect negative rates soon.

Once the current boom dies off and there are less mortgages being granted. I suspect they will move to negative rates as a new way to boost the market.

If coronavirus is seasonal, currently all looks well and vaccines are a success from the public perception.

However if vaccine efficency isn't very great (which I belive) or a new strain emerges. Then they'll pull the trigger. I guess around September time we will know more.

China.

Exporting deflation since late 90s.

Now exporting inflation.

Brace.

[spyguy]

1 hour ago, Flat Bear said:

Up until the last few years there has been proportionalely higher interest rates in the UK compared with US

You are right this is theorectically not an automatic thing but when the US starts to tighten the BOE will have no choice unless they want to see a weakening of sterling and thus higher inflation still

 

What Was the Interest Rate Then?

Download the Results in a Spreadsheet Format

Year	UK Short-Term Rate: Ordinary Funds, Contemporary Series	UK Short-Term Rate: Ordinary Funds, Consistent Series	UK Short-Term Rate: Surplus Funds, Contemporary Series	UK Short-Term Rate: Surplus Funds, Consistent Series	UK Long-Term Rate: Contemporary Series	UK Long-Term Rate: Consistent Series
1988	9.80	9.80	10.33	10.33	8.52	8.52
1989	13.28	13.28	13.89	13.89	8.39	8.39
1990	14.09	14.09	14.77	14.77	9.73	9.73
1991	10.82	10.82	11.52	11.52	9.16	9.16
1992	8.94	8.94	9.62	9.62	8.79	8.79
1993	5.21	5.21	5.94	5.94	8.06	8.06
1994	5.15	5.15	5.50	5.50	7.83	7.83
1995	6.33	6.33	6.68	6.68	8.09	8.09
1996	5.78	5.78	6.03	6.03	8.15	8.15
1997	6.48	6.48	6.83	6.83	6.99	6.99
1998	6.82	6.82	7.34	7.34	5.33	5.33
1999	5.04	5.04	5.45	5.45	4.51	4.51
2000	5.80	5.80	6.11	6.11	4.42	4.42
2001	4.76	4.76	4.97	4.97	4.67	4.67
2002	3.86	3.86	3.99	3.99	4.75	4.75
2003	3.56	3.56	3.67	3.67	4.64	4.64
2004	4.44	4.44	4.58	4.58	4.69	4.69
2005	4.55	4.55	4.69	4.69	4.33	4.33
2006	4.65	4.65	4.80	4.80	4.17	4.17
2007	5.53	5.53	5.96	5.96	4.56	4.56
2008	4.32	4.32	5.50	5.50	4.66	4.66
2009	0.53	0.53	1.19	1.19	4.45	4.45
2010	0.50	0.50	0.69	0.69	4.47	4.47
2011	0.48	0.48	0.89	0.89	4.04	4.04
2012	0.31	0.31	0.84	0.84	3.08	3.08
2013	0.30	0.30	0.49	0.49	3.42	3.42
2014	0.38	0.38	0.54	0.54	3.27	3.27
2015	0.44	0.44	0.55	0.55	2.54	2.54
2016	0.32	0.32	0.49	0.49	2.04	2.04
2017	0.29	0.29	0.36	0.36	1.92	1.92
2018	0.60	0.60	0.72	0.72	1.90	1.90
2019	0.00	0.00	0.81	0.81	1.43	1.43
2020	0.00	0.00	0.29	0.29	0.82	0.82

Year	US Short-Term Rate: Ordinary Funds, Contemporary Series	US Short-Term Rate: Ordinary Funds, Consistent Series	US Short-Term Rate: Surplus Funds, Contemporary Series	US Short-Term Rate: Surplus Funds, Consistent Series	US Long-Term Rate: Contemporary Series	US Long-Term Rate: Consistent Series
1988	6.67	6.67	7.57	7.57	9.71	9.71
1989	8.11	8.11	9.21	9.21	9.26	9.26
1990	7.50	7.50	8.10	8.10	9.32	9.32
1991	5.38	5.38	5.69	5.69	8.77	8.77
1992	3.43	3.43	3.52	3.52	8.14	8.14
1993	3.00	3.00	3.02	3.02	7.22	7.22
1994	4.25	4.25	4.21	4.21	7.97	7.97
1995	5.49	5.49	5.83	5.83	7.59	7.59
1996	5.01	5.01	5.30	5.30	7.37	7.37
1997	5.06	5.06	5.46	5.46	7.27	7.27
1998	4.78	4.78	5.35	5.35	6.53	6.53
1999	4.64	4.64	4.97	4.97	7.05	7.05
2000	5.82	5.82	6.24	6.24	7.62	7.62
2001	3.40	3.40	3.88	3.88	7.08	7.08
2002	1.61	1.61	1.67	1.67	6.49	6.49
2003	1.01	1.01	1.13	1.13	5.66	5.66
2004	1.37	1.37	1.35	1.35	5.63	5.63
2005	3.15	3.15	3.22	3.22	5.23	5.23
2006	4.73	4.73	4.97	4.97	5.59	5.59
2007	4.36	4.36	5.02	5.02	5.56	5.56
2008	1.37	1.37	1.92	1.92	5.63	5.63
2009	0.15	0.15	0.16	0.16	5.31	5.31
2010	0.14	0.14	0.18	0.18	4.94	4.94
2011	0.05	0.05	0.10	0.10	4.64	4.64
2012	0.09	0.09	0.14	0.14	3.67	3.67
2013	0.06	0.06	0.11	0.11	4.23	4.23
2014	0.03	0.03	0.09	0.09	4.16	4.16
2015	0.05	0.05	0.13	0.13	3.89	3.89
2016	0.32	0.32	0.39	0.39	3.67	3.67
2017	0.93	0.93	1.00	1.00	3.74	3.74
2018	1.94	1.94	1.83	1.83	3.93	3.93
2019	2.06	2.06	2.16	2.16	3.39	3.39
2020	0.35	0.35	0.37	0.37	2.48	2.48

 

Please read our Note on Data Revisions.

These data may be used for non-profit educational purposes if proper credit is given. You need not ask for permission. If you need to publish a table of more than five consecutive years of these data in electronic or print documents, we ask that you contact us first. If you are using these data in a document for profit purpose, we expect to be cited and that the user will make a donation to our cite. Anyone is allowed to publish electronic links to these data.

Citation

Lawrence H. Officer, "What Was the Interest Rate Then?" MeasuringWorth, 2021
URL: http://www.measuringworth.com/interestrates/

 

Up until the last few years there has been proportionately higher interest rates in the UK compared with US

You are right this is theoretically not an automatic thing but when the US starts to tighten the BOE will have no choice unless they want to see a weakening of sterling and thus higher inflation still

 

 

Not just BoE, ECB will have to follow too.

In previous tightening cycles, IR were split across US, Europe n Japan.

Niw Chiba is 2nd or largest economy. Outsourced its trading currency to the US.

Europe n Japan have shrunk from the world markets. Just a hedge now.

So theallmighty dollar usmightier now.

Fed raises, you raise. Or all the free cash leaves.

[Flat Bear]

4 minutes ago, spyguy said:

Not just BoE, ECB will have to follow too.

In previous tightening cycles, IR were split across US, Europe n Japan.

Niw Chiba is 2nd or largest economy. Outsourced its trading currency to the US.

Europe n Japan have shrunk from the world markets. Just a hedge now.

So theallmighty dollar usmightier now.

Fed raises, you raise. Or all the free cash leaves.

6 minutes ago, spyguy said:

China.

Exporting deflation since late 90s.

Now exporting inflation.

Brace.

Yes and yes spot on.

[captainb]

1 hour ago, Flat Bear said:

Up until the last few years there has been proportionalely higher interest rates in the UK compared with US

You are right this is theorectically not an automatic thing but when the US starts to tighten the BOE will have no choice unless they want to see a weakening of sterling and thus higher inflation still

 

What Was the Interest Rate Then?

Download the Results in a Spreadsheet Format

Year	UK Short-Term Rate: Ordinary Funds, Contemporary Series	UK Short-Term Rate: Ordinary Funds, Consistent Series	UK Short-Term Rate: Surplus Funds, Contemporary Series	UK Short-Term Rate: Surplus Funds, Consistent Series	UK Long-Term Rate: Contemporary Series	UK Long-Term Rate: Consistent Series
1988	9.80	9.80	10.33	10.33	8.52	8.52
1989	13.28	13.28	13.89	13.89	8.39	8.39
1990	14.09	14.09	14.77	14.77	9.73	9.73
1991	10.82	10.82	11.52	11.52	9.16	9.16
1992	8.94	8.94	9.62	9.62	8.79	8.79
1993	5.21	5.21	5.94	5.94	8.06	8.06
1994	5.15	5.15	5.50	5.50	7.83	7.83
1995	6.33	6.33	6.68	6.68	8.09	8.09
1996	5.78	5.78	6.03	6.03	8.15	8.15
1997	6.48	6.48	6.83	6.83	6.99	6.99
1998	6.82	6.82	7.34	7.34	5.33	5.33
1999	5.04	5.04	5.45	5.45	4.51	4.51
2000	5.80	5.80	6.11	6.11	4.42	4.42
2001	4.76	4.76	4.97	4.97	4.67	4.67
2002	3.86	3.86	3.99	3.99	4.75	4.75
2003	3.56	3.56	3.67	3.67	4.64	4.64
2004	4.44	4.44	4.58	4.58	4.69	4.69
2005	4.55	4.55	4.69	4.69	4.33	4.33
2006	4.65	4.65	4.80	4.80	4.17	4.17
2007	5.53	5.53	5.96	5.96	4.56	4.56
2008	4.32	4.32	5.50	5.50	4.66	4.66
2009	0.53	0.53	1.19	1.19	4.45	4.45
2010	0.50	0.50	0.69	0.69	4.47	4.47
2011	0.48	0.48	0.89	0.89	4.04	4.04
2012	0.31	0.31	0.84	0.84	3.08	3.08
2013	0.30	0.30	0.49	0.49	3.42	3.42
2014	0.38	0.38	0.54	0.54	3.27	3.27
2015	0.44	0.44	0.55	0.55	2.54	2.54
2016	0.32	0.32	0.49	0.49	2.04	2.04
2017	0.29	0.29	0.36	0.36	1.92	1.92
2018	0.60	0.60	0.72	0.72	1.90	1.90
2019	0.00	0.00	0.81	0.81	1.43	1.43
2020	0.00	0.00	0.29	0.29	0.82	0.82

Year	US Short-Term Rate: Ordinary Funds, Contemporary Series	US Short-Term Rate: Ordinary Funds, Consistent Series	US Short-Term Rate: Surplus Funds, Contemporary Series	US Short-Term Rate: Surplus Funds, Consistent Series	US Long-Term Rate: Contemporary Series	US Long-Term Rate: Consistent Series
1988	6.67	6.67	7.57	7.57	9.71	9.71
1989	8.11	8.11	9.21	9.21	9.26	9.26
1990	7.50	7.50	8.10	8.10	9.32	9.32
1991	5.38	5.38	5.69	5.69	8.77	8.77
1992	3.43	3.43	3.52	3.52	8.14	8.14
1993	3.00	3.00	3.02	3.02	7.22	7.22
1994	4.25	4.25	4.21	4.21	7.97	7.97
1995	5.49	5.49	5.83	5.83	7.59	7.59
1996	5.01	5.01	5.30	5.30	7.37	7.37
1997	5.06	5.06	5.46	5.46	7.27	7.27
1998	4.78	4.78	5.35	5.35	6.53	6.53
1999	4.64	4.64	4.97	4.97	7.05	7.05
2000	5.82	5.82	6.24	6.24	7.62	7.62
2001	3.40	3.40	3.88	3.88	7.08	7.08
2002	1.61	1.61	1.67	1.67	6.49	6.49
2003	1.01	1.01	1.13	1.13	5.66	5.66
2004	1.37	1.37	1.35	1.35	5.63	5.63
2005	3.15	3.15	3.22	3.22	5.23	5.23
2006	4.73	4.73	4.97	4.97	5.59	5.59
2007	4.36	4.36	5.02	5.02	5.56	5.56
2008	1.37	1.37	1.92	1.92	5.63	5.63
2009	0.15	0.15	0.16	0.16	5.31	5.31
2010	0.14	0.14	0.18	0.18	4.94	4.94
2011	0.05	0.05	0.10	0.10	4.64	4.64
2012	0.09	0.09	0.14	0.14	3.67	3.67
2013	0.06	0.06	0.11	0.11	4.23	4.23
2014	0.03	0.03	0.09	0.09	4.16	4.16
2015	0.05	0.05	0.13	0.13	3.89	3.89
2016	0.32	0.32	0.39	0.39	3.67	3.67
2017	0.93	0.93	1.00	1.00	3.74	3.74
2018	1.94	1.94	1.83	1.83	3.93	3.93
2019	2.06	2.06	2.16	2.16	3.39	3.39
2020	0.35	0.35	0.37	0.37	2.48	2.48

 

Please read our Note on Data Revisions.

These data may be used for non-profit educational purposes if proper credit is given. You need not ask for permission. If you need to publish a table of more than five consecutive years of these data in electronic or print documents, we ask that you contact us first. If you are using these data in a document for profit purpose, we expect to be cited and that the user will make a donation to our cite. Anyone is allowed to publish electronic links to these data.

Citation

Lawrence H. Officer, "What Was the Interest Rate Then?" MeasuringWorth, 2021
URL: http://www.measuringworth.com/interestrates/

 

Up until the last few years there has been proportionately higher interest rates in the UK compared with US

You are right this is theoretically not an automatic thing but when the US starts to tighten the BOE will have no choice unless they want to see a weakening of sterling and thus higher inflation still

 

 

Depends though. USA rose to 2.5% and we left at naff all. Doing that Inflation hit heady heights of 3% even with the sterling declines post Brexit.

In the early 90s we hit 12% just as they were falling all the way to 3%.

 

Not saying one doesn't influence the other given all the commodities priced in USD but it evidently isnt a "have no choice" but to follow. If it was one would behave as a direct tracker as the other.

 

Edited June 20, 2021 by captainb