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  1. #1

    Should the Bank of England hike interest rates?

    To raise or not to raise interest rates? The Old Lady of Threadneedle Street is about to face an uncomfortable decision, one suspects.

    On the one hand the economic recovery remains muted, and millions of homeowners are still mired in debt. Hiking rates significantly any time soon might tip many over the edge. And that is without taking into account the effects of yesterday's slasher budget.

    On the other hand inflation is too high, and has been for months. Month in month out the number come in above target. And, worse still, inflation is set to take off even further once VAT is hiked to 20% in January.

    Failure to act now could deal a hammer blow to the Bank's reputation, and the interest rate setting Monetary Policy Committee knows it.

    So what do you think, should the Bank hike rates now or any time soon, and if so by how much?

    And more to the point, will they? Dare they?

  2. #2
    There should definitely be no rise in interest rates for the forseeable future. 'Sticky' inflation isn't the problem at the moment - it is the weakness in economic growth. Raising rates before we see evidence of solid sustained growth (which is unlikely for at least 2/3 years) will depress the economy and do far more damage in both the short and long term. Better to be safe and keep conditions loose for longer than be aggressive and create an even more sorry state than we are in now!

  3. #3
    Interest rates should rise immediately to strengthen the Pound, knock out inflation, and encourage saving rather than spending and living on credit. The economy will not recover in any real sense until the underlying problems are cured and an increase in interest rates would be a good start. Debtors would not like it but they are part of the problem.

  4. #4
    Ian while I agree with your sentiments the economy won't take tax and interest rises at the same time. it's already obvious by the delay in implementation of the VAT rise that the Chancellor is trying to create a mini spending boom for the rest of this year---he isn't going to risk his extra revenue short-term to try to squeeze inflation.


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