Thursday, November 9, 2006
no surprise: 5% base rate
UK interest rates increased to 5%
The Bank of England has increased UK interest rates to a five-year high of 5% because of inflation concerns.
Posted by millard @ 12:04 PM (424 views)
18 thoughts on “no surprise: 5% base rate”
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paul says:
I like the following:
“The Bank has the difficult task of weighing up the effects of a possible slowdown in consumer spending caused by higher interest rates and people finding it harder to repay their debts, against its remit of reining in inflation.”
It is preceisely because people have overstretched themselves that rates have gone up.
Duh.
harold says:
“Either way, with interest rates 50 basis points higher than six months ago, it could be a contributing factor to deterring people from entering the housing market over the next few months.” Vicky Redwood, UK economist at Capital Economics
Err, yes Vicky, and people maybe also deterred due to the inflated bubble that is the UK property market.
sovietuk says:
higher higher 🙂
Eddie_lomax says:
I don’t expect people to stop trying to screw each other with ever greater house prices, but at least now there is some more pain for them.
Bring it on!
george monsoon says:
If they boil this frog any more, the bones will be all that is left…!!
Get the rate up 2% and be done with it, thats what I say…
sold 2 rent 1 says:
george,
Just found this article
THE LEGEND OF THE BOILING FROG IS JUST A LEGEND
http://www.uga.edu/srel/ecoview11-18-02.htm
The idea that you can induce a frog to remain in boiling water if you start it off in cold water is not true biologically.
The metaphor lies in the frog’s ability to escape from the container: if there’s no way out, then the frog’s fate is a foregone conclusion.
denzil says:
Fantastic! That’s an extra .25 on my cash isa.
David20040_0 says:
This will not make an ounce of difference to increases in house prices.
george monsoon says:
sold 2 rent 1 –
you mean this one?
“The legend is entirely incorrect! The `critical thermal maxima’ of many species of frogs have been determined by several investigators. In this procedure, the water in which a frog is submerged is heated gradually at about 2 degrees Fahrenheit per minute. As the temperature of the water is gradually increased, the frog will eventually become more and more active in attempts to escape the heated water. If the container size and opening allow the frog to jump out, it will do so.” Naturally, if the frog were not allowed to escape it would eventually begin to show signs of heat stress, muscular spasms, heat rigor, and death.
So where does that leave us with the metaphor for the human response to environmental degradation? Well the idea that you can induce a frog to remain in boiling water if you start it off in cold water is not true biologically. But that does not diminish the need to keep an eye out for the gradual relaxation of environmental laws and regulations. The metaphor lies in the frog’s ability to escape from the container: if there’s no way out, then the frog’s fate is a foregone conclusion.
Bubbles. . . says:
Denzil same here!!! bring on more rises!!! Horray Today is a good day, and just the beginning of further rises…Not that I dont like EA’s but hope it slows sales as they have been so smug,which I doubt though whats ÂŁ20 quid on 100,000 oh oops if prices are above 200,000 (average) Thats ÂŁ40 quid!! 40 a month times 12 an extra ÂŁ480 a year to own a property in Band D to pay the Council tax that has risen to ÂŁ1,300 a year plus if youve done the 95% mortgage
ÂŁ1,150 ish a month capital repayment before rise + heating costs which they say average 1,000 a year and rising! Oh who wants to pay that price for that house???? + extra ÂŁ80 month to come with more rises I hope!!! 2-3 more 0.25%’s. OOps isnt it compounded intrest that works differently???? 0.25% on 0.25%….?? Please help with the math..
Bubbles. . . says:
Horray!!!!
Civic_illusion says:
Keep lifting it.. Higher & higher.. higherrrr
harold says:
sold 2 rent 1 and george monsoon
Err, sorry guys, you’ve lost me…
Ticktock says:
I’m certainly no expert, but arn’t rising prices a concequence of inflation, rather than the cause of it? If the bank’s remit is to prevent inflation, shouldn’t they be reducing the volume of money that they are printing, rather than increasing it?
Fight inflation? What a laugh, the BOE is the cause of inflation, inflationary growth IS its policy.
Oh what a tangled web we weave….
C'mon Correction says:
Question is – Where next for interest rates? The money markets seem sure of another .25% hike in Feb ’07. Beyond that CPI and RPI in the new year will count I reckon.
Interesting to see Sterling falling after the news – does this suggest money markets were maybe quite keen on a .5% hike in Nov?
george monsoon says:
Harold, the theory of “boil the frog” is that if you place a frog in a pan of cold water and heat it slowly, then it will stay there until it boils, but if you heat it quickly it will jump ship. The BoE use this method to raise or cut interest rates by .25% at a time instead of jumping by 1% or more, which would probably cause the market to collapse.
I cant think of a better analogy, try doing a google search on “boil the frog” wikipedia is pretty good for this
uncle chris says:
At least the frogs have an affordable place to live. By the way, I like the hints of “another IR rise in the new year” that have crept into the reporting. Is this ‘spin’ to soften the city and country up to gradual increases. I’m sorry, I’m with others here who suggest a big shock rise in IRs is the only thing that will knock sense into consumers, who have been living above their means for many years now.
bidin'matime says:
Nothing wrong with small rises – lots of small rises means lots of ‘rate rise’ headlines – people will start getting the message. In any case, we want inflation to keep edging up, so they are forced to raise rates even higher – if people stop spending now, they could be lowering them again next spring… So let’s see those frogs well and truly boiled…