Inflation and Interest rates

Everyone is talking about inflation at the moment. The MPC’s sole remit is to bring inflation down. The only way they can do that is by increasing interest rates, even though inflation is currently being stoked by high oil prices, which the MPC can do nothing about. So raising rates will just make everyone poorer and the MPC’s inflation target will just slip farther away.

If you want a glimpse of what will happen, look at India – they have just announced that their inflation rate has now topped 11%, despite increasing interest rates to 8%.

We are in for a tough ride! Disappointed

This entry was posted in Finance. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s