The perceived wisdom that raising interests rates has got to be questioned in the light of another hump in the inflation rate.
All the reports on the TV news today suggest that the rise in inflation is down to a rise in pricse of essential food items and fuel, not consumer goods. Whilst raising interest rates (or even taxes) might stop people buying a new DVD player, it will not stop people buying essentials like bread, milk and petrol, which are the key causes for the rise in inflation this month.
So given that the economy is rather up the creek and we appear to be losing the proverbial paddle, is the Bank of England right to believe that a delay in further interest rate cuts will actually do anything to halt inflation rising, more likely a long delay before a further rate cut will actially exacerbate the problems in the economy at the moment.
All the reports on the TV news today suggest that the rise in inflation is down to a rise in pricse of essential food items and fuel, not consumer goods. Whilst raising interest rates (or even taxes) might stop people buying a new DVD player, it will not stop people buying essentials like bread, milk and petrol, which are the key causes for the rise in inflation this month.
So given that the economy is rather up the creek and we appear to be losing the proverbial paddle, is the Bank of England right to believe that a delay in further interest rate cuts will actually do anything to halt inflation rising, more likely a long delay before a further rate cut will actially exacerbate the problems in the economy at the moment.
