Yep as I suggested above it doesn’t to me make theoretical sense to raise rates given what his driving the inflation right now.
I’ve studied modules in economics to your earlier post, and had the same basic principle drilled in to me.
To my mind, the inflation we’re seeing is being driven in basic commodities and raw materials that power and fuel the day to day living of people, the necessities (to some degree) to live. It’s the buying power of peoples cash, which can purchase less.
The inflation is not only fuel driven which increases the cost of basically everything, it’s the cost of transport as we’ve realised truck drivers are an important labour resource post Brexit and covid, the cost of packaging has gone up because more people are at home ordering off Amazon, the factories and ports in China have shut down pushing the price of a container up by 50%. Whilst some of these factors might normalise, when you start paying lorry drivers higher wages to train, they stick at that new level until over time they perhaps stagnate.
It isn’t so much driven by people getting access to cheap and easy finance, which pushes the price of houses, cars and clothes up on a basic level, and financial assets at a more complex level.
I do think interest rates are too low anyway, we’re all living on a finance drug and the theories we were taught as kids about saving are arguably poor advice to a youngster currently (as a cash ISA for example is a terrible investment in todays money).
Even if interest rates go up significantly from what they are today (0.75%?), it’ll still be low even versus levels pre financial crisis where they were what 2-2.5% was it?
The BoE rise won’t slow inflation as food inflation hasn’t hit yet. Supermarket bills will rise close to 10% over the next 12 months I reckon. I don’t see how interest rates can stop that.
And pray to fucking god if we end up with a no deal Brexit by the way.