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May 05, 2011

Comments

Andrew Smith

Of course interest rates should rise.

The interest rate is set by the BoE whose objective is to keep inflation as measured by CPI at 2%. It has failed to achieve its given objective and should raise interest rates to solve that.

Growth is nothing to do with the BoE.

Besides which, we know from past decades, that letting inflation run out of control is destructive for the economy and it takes years and a strong determined government (Margaret Thatcher & Howe in his responsible days) to get control again.

The damage done by inflation is:

1
Underserved reduction in savers assets and underserved gains to borrowers, especially irresponsible ones.

2
Higher required rates of return on investments. This is to protect against the loss of value of money invested, risk of the interest rates rising a lot to stem inflation and risk the economy will (continue) to bottom

3
Unrealistic expectations are built up in the economy which distort decision making and the ability to plan.

Above all else, the emergency rate of interest was itself unjustified, and now it is damaging because the effect of QE is and will be inflation.

Frankland Macdonald Wood

Imposed low interest rates are a form of confiscation and of theft. It is ameans of the indebted to welsh on part of their debt. It destroys the legitimate reward for lending by keeping the rward below the ruling rate of inflation, thus confiscating the savings of the elderly and the prudent, and transferring the value to the imprudent, the borrower and the over-spending state. As used at peresent it is a means of putting additional tax on the most deserving sector to support the very people who caused all the problems. The government gains by not having to do so much prudent cutting of expenditure and not giving so much pain to other sectors of society.

Jack Pershing

Why is it perceived wisdom that an increse in interest rates will lower inflation? Has this been carved in tablets of stone? Sure it will dampen demand as borrowers have less to spend, but it will also push up prices as the cost of borrowing money is part of the cost of the goods we buy. In theory stirling will rise making our exports more costly. People will be thrown out of their houses and jobs if interest rates rise, and if they rise significantly the country will grind to a halt as we enter a double dip.

Tony Makara

The effect on Sterling, in making UK goods uncompetitive on the global market, should be a major factor in determining whether rates should rise.

Our economy is dangerously unbalanced, increasingly dependent on imports, in manufactured wares, in foodstuffs and leading to British jobs being outsourced, all because raising interest rates to control inflation over the last thirty years has increasingly left the Pound artificially overvalued, and therefore uncompetitive.

We need to find new ways to control inflation, and to improve liquidity, instead of resorting to the damaging policy of raising interest rates as a quick-fix. Particularly at a time when BRIC soft currency economies hold such a huge advantage when it comes to currency differentials.

Alistair Bull

Only somebody who has a staggeringly inept understanding of economics would call for a rate rise at any point in the near future. I'd love to see rates go up for my savings, but let's not be idiots about it chaps

Ricardo's Ghost

Ridiculous argument from Allister Heath. People are finding their living standards squeezed so we should put up interest rates? Interest rates combat inflation by putting a squeeze on living standards...

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