Another interest rate rise and another bunch of moaners come out of the woodwork.Yes, it’s true, I don’t have a mortgage. In fact, I don’t have any debt to speak of.
This said I believe that if everyone had a basic knowledge of economics then the aforementioned moaners would know why interest rates had to go up, therefore making the moaning unnecessary.
Try and digest these details:
- Interest rates go up and down
- The economy works in cycles (booms/recessions, up-phases/down-phases)
- Bigger the boom = Bigger the recession
- We want the economy to grow but an economy with high inflation will inevitably lead to recession
- We want to slow down inflation to avoid a harsh recession
- Raising interest rates decreases inflationary pressures by limiting the amount of new money coming into the economy.
- If interest rates are not raised now, they will have to be raised by even more in the future.
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3 comments:
All those points about why interest rates should go up can all be seriously questioned... the point is i thought those magnificent managers of the economy were meant to make sure there would no interest rate rises for the (oh let me think and choose an abbitary time frame) three years. When people get lied to they get whingy.
Did they actually say that rates wouldn't go up? Wasn't the lie that interest rates are lower than when we were under labour? The problem being that whilst the % is smaller, the price of housing means that the actual amount is far more. And that amount, as a proportion of what we earn, is much higher.
Luke, please go ahead and challenge any of those statements about interest rates.
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