Bank of England steady the ship with a 0.25% Base Rate increase

Bank of England steady the ship with a 0.25% Base Rate increase

12:14 PM, 23rd March 2023, About A year ago 2

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The Bank of England’s monetary policy committee (MPC) today voted by a majority of 7–2 to increase Bank Rate by 0.25%, to 4.25%. Two members of the MPC voted to keep the rate the same at 4%.

The eleventh-hour surprise was yesterday’s inflation figures going up instead of down mainly due to the recent rise in food prices. This put additional pressure on an increase that may not have been voted for a week ago with wholesale gas futures and oil prices both down.

This is with the backdrop of the Fed only increasing the US rate by 0.25% amongst fears for the liquidy of some medium-sized American banks. These banks are struggling to sell the long-term gilts and bonds they purchased when interest rates were much lower. So, when there is a call on cash reserves, they find it hard to liquidate the assets without making a loss and reporting these losses is making the situation worse for confidence.

The Bank summary reported: “CPI inflation is still expected to fall significantly in 2023 Q2, to a lower rate than anticipated in the February Report. This lower-than-expected rate is largely due to the near-term news in the Budget including on the EPG, alongside the falls in wholesale energy prices. Services CPI inflation is expected to remain broadly unchanged in the near term, but wage growth is likely to fall back somewhat more quickly than projected in the February Report.”

The above news would indicate at current forecasts, and discounting any further bank instability, that this may be the last rate rise before a levelling off and gradual reduction in the next year.

The bank goes on the conclude: “The extent to which domestic inflationary pressures ease will depend on the evolution of the economy, including the impact of the significant increases in Bank Rate so far. Uncertainties around the financial and economic outlook have risen.”

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14:23 PM, 23rd March 2023, About A year ago

Utter nonsense.

Inflation is not price rises, inflation is the printing of money which results in price rises.

Further, as the fractional reserve system allows for an almost limitless amount of money printing, there is no incentive to reduce inflation.

2 things need to happen in this Keynsian monetary nightmare, first they need to increase the banks' reserve requirements so as to deleverage the system, then they need to adjust rates to gently encourage more sound investment.

It would be best that central banks were put to sleep like a lame farm animal as they are only a burden and parasite upon our lives. Unfortunately, they are so entrenched in our political system that there is no incentive for the politicians to speak out against them.

Consider this, all central banks operate outside the legal jurisdiction of the countries to which they are supposed to be serving.

Dennis Forrest

16:57 PM, 23rd March 2023, About A year ago

Rubbish government thinking. Supposed to be intelligent people? Inflation was higher because food prices went up more than expected. So a double whammy now for many people, increased mortgage payments as well.

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