At 2:05 I said inflation was set to fall this year. But, when I got Bank of England inflation forecast, they actually expect headline rate to rise to 2.8% by Sep, before falling back to 2%. Core inflation is set to fall this year.
Interest rates "have not been falling" over the last several decades. Instead, the government has dictated interest rates at ever lower levels. There's a big difference there. Interest rates are not happening like the weather does, they are deliberately dictated by specific idnividuals.
Uk wages: Stagnant for 15+ years. Business: It's great! Uk wages: Increase very slightly over the short term. Business: The sky is falling! Do me a favour...
All these issues stem from an economy grappling with uncertainties, including housing problems,foreclosures, global fluctuations, and the aftermath of the pandemic, leading to instability. Rising inflation, sluggish growth, and trade disruptions demand urgent attention from all sectors to restore stability and stimulate growth.
In retirement, safeguarding your wealth against inflation is essential. Consider options like TIPS (Treasury Inflation-Protected Securities), commodities, or foreign currencies to hedge against a weakening dollar. Diversifying your portfolio with global real estate, international bonds, or high-quality foreign stocks can provide additional protection and growth opportunities in an inflationary environment.
My busy career leaves little time for investment analysis. For the past seven years, a fiduciary has managed my portfolio, skillfully adjusting to market changes and ensuring informed, successful decisions. You might consider a similar strategy.
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The European Central Bank interest rate will be at 2.75% tomorrow when they cut by 0.25%. The Bank of England interest rate is 4.75% a whole 2% higher than a comparable economy to ours and arguably a hostile economy to ours. The BOE are paralysed with inflation fear so a recession is incoming!
In the past it seemed that the Bank of England was on the ball when it came to setting rates but they have been asleep at the wheel over the past 4 or 5 years. They kept interest rates too low following the pandemic when it was clear that inflationary pressures where building up and more recently have been slow to cut rates when its clearly the economy is struggling. As things stand, I think there is a good chance the UK will be in recession in 2025.
Do get the feeling they were either not paying attention or simply too scared to "pull the levers" too soon, preferring to see what the Europe and the US did every single time, classic case of "Nevermind what he's doing, you concentrate on your own work!", LOL! The constant dithering I believe is partly the reason we're in a bit of a mess. However they do seem to have woken a up a bit in the last 12 months and actually started paying attention again.
I dont think they did keep them too low. As it states in the video, it was cost push inflation, which interest rates cannot resolve. In contrast, the Bank of Japan did not increase interest rates, and the government used fiscal policy to cushion the impacts. The inflation was transitory, as supply constraints resolved, and dropped again naturally. That was a viable option for the BoE, but it chose to follow the herd. Now its foolishly sticking to higher rates, which only makes a recession more likely.
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The BOE has been behind the curve for a long time. They were slow to increase rates. In a blind panic they increased rates way beyond where they needed to be. I think 4.5% should have been the peak, and we would now be at around 3.75 -4%, which feels about right. The main driver of growth in this country is consumer spending. If people's mortgages have doubled, then that money is missing from the economy, and everything will flatline. It's not just mortgages, general finance rates have more than tripled. If a business needs to purchase vehicles or kit, the rates are crazy! In my opinion, the BOE have completely stifled the UK economy. If Rachel Reeve's wanted to help working families and to show real leadership, she should invoke Section 19 of the BOE Act and force the Bank to lower interest rates by at least 0.5%.
We need business back. We need to lower the taxes so it brings business back to our shores, you will need to keep interest rates the same to keep inflation at bay, this is key, but unfortunately we have a very incompetent party in power that don’t do either those things. Stupid idiots labour.
Cutting spending will do zilch, defecit spending will spook the markets, tax rises will kill the economy. The only choice is ‘nothing’. Austerity really did brutalise the Uk government, cutting departments to there bare bones so they are ineffective while simultaneously cutting taxes and deficit spending somehow. It truly was the worse policy enacted by any government. If labour can somehow salvage the mess it will be a miracle
So how does Equality work in a country that adds 1.5 Million completely unskilled penny less majority unemployable people to the society each each.? The current system is setup for wide scale poverty and zero growth and capital flight...
@thepandasdoitbetter we don't make any money. Taxing wealth won't work we need productivity. Effective tax rate already 78%. If it were me, I wouldn't work. Oh wait, I don't. But I don't expect to live of others either. Every failed communist state, and that's all of them, Convinced people that they could have more if they took everything from the rich. You eventually run out of others money. The rich end up being anyone with a job. Or a bit of land. Or a horse.
@@Marek-o3u Because if the richest have most of the money they can just buy all the assets and the country became an extractive economy. No real investments, just milking the cow. They can get their GDP growth up there a22 if all that growth just go to the pockets of the renters.
Interest rates aren't just supposed to control inflation, they also (IMO mainly) control over-leveraging. We're in excessive debt and lowering rates would incentivise more debt.
Made, i’m sure you are aware that the ONS do not correctly measure CPIH as they elegantly refuse to measure the accurate housing costs, as we otherwise would be way higher than any other comparable economy anywhere. Rather than rent and mortgages, they measure something they call rent-equivalent which (surprise surprise) is way lower than actual housing costs. So as often before, they fake it to look good. Exactly as the U.K. authorities claim we have the best drinking water in the world (along with 3 other countries), allegedly way better water than in Scandinavia, Switzerland, Austria and other countries famed for the best drinking water in the world. It’s obviously also lies, or obfuscation of facts, mostly to make it look like the politicians knows what they are doing. Just this morning I read the dimwit Rachel Reeves saying she will make Britain the European Silicon Valley. She knows as much about creating centres of excellence in fields of technology as I do about open heart surgery. Nobody leaving a British university can afford to tinker around with potentially ground breaking tech, as they are up to tonsils in debt, and desperately need jobs to start paying, if not to be hampered with debt for rest of their lives, and British banks do not offer youngsters any upcoming inventor money either, as they focus on bumper profits. Fake fake fake, and then more fake….
9.45 you mentioned you cant increase BR to lower cost of energy. But aren't you forgetting that we're a net importer of energy and the pounds value matters so higher interest rate helps increase the pounds value lowering energy costs.
Get 20+ million people into 20-35 year mortgages are 1-2% interest rates... Then up interest rate to 3-5%.... Not good for anyone at all. Weak spending power is bad for business and the consumer.
@ Agreed CPIH needs to be used as standard inflation figure not CPI, it's pretty useless using CPI when the single biggest spend of income is spent on housing!
The normalisation of interest rates is not the problem, it just exposes the problem, we have gone through a prolonged period of artificially stimulating growth and asset prices with central bank policies of financial engineering manipulating interest rates and bond yields which enriched a small fraction of society, indebted the majority who leverage themselves and now are left servicing their debts at market driven rate. We are likely going through a extended period of very low growth, asset price contraction until the debt burden get digested into the economy.
High interest rate = Higher mortgages and loans.= less spare income to buy goods/expand businesses. Selling less goods and services = lower employment = less taxes collected = more housing benefits, unemployment and other claims on less taxes collected.
I haven’t watched the video, but I will give a informed view on why we should be worried about Bank of England stance. Let’s understand that through thatcher, banking in London was revolutionary for the country and city, we know about the washing of bad money, we get it. But since 2008, and especially since post brexit. U.K. banking is essentially trying to a financial product, e.g first i phone and Google search engine, mild updates were made from a banking point of view, but the rest of the world were surpassing, by now using I phone 16 and ChatGPT. The product and productivity is none existent and this is the last throws of the Bank of England to go down swing, im right, you’re wrong. The financial sector is really trying to justify the wage, but like us in the middle class it’s gone, they just can’t accept that. The trick that work so well for 40yrs is gone and they can’t accept that, but somehow they need the big bucks to turn it around, when U.K. need to redraft and look long and hard what this economy is all about. In essence you might as well have a military state, because it will then be the banks that will tell us what we should spend on education, healthcare, infrastructure. This will then further divide the wealth gap and the banks will further deregulate in an aim of GDP or some measurement that won’t reflect Day to day life in the U.K..
Obvious to me just not targeting wealth and the people with money are not affected by rates anyway. It's the craziest off course ship I've ever seen and it's heading for the waterfall at full speed. They still continue to target the bottom while mid to high end earners are piling the cash. What do you think is going to happen when rates drop? All that saved up cash is going to be dumped into assets which will drive inflation to the moon in terms of housing and luxury spending.
To me it's why the bank of England isn't keen on reducing rates they're really worried that people will start spending like crazy. They're really hoping government bring out policies that reduce that money being dumped but they're hopeless.
Rising wages are just from lack of investment in education from the government and firms. So when you have a few trained people getting hammered by crazy inflation you walk unless your wages go up. The firms are hemeraging talent so they start giving pay rises. I just think the government just continue walking blindfolded through a raging fire. The solution is easy you reward people for investing in UK firms and give tax breaks to companies that train and grow their work force. You also target the vast wealth some people have either by tax investigations or means testing the state pension. The country needs big ideas probably too late to save to be honest. We've had 15 years of passing the problem to the next guy.
Lowering interest rates will just sky rocket house prices once more. The whole problem has been the ease of borrowing an extra £50k on a mortgage at a cost of an extra £150 per month. Savings and real ownership need to be incentivised not an endless system of managing monthly repayments,
So what is the correct level for interest rates ? Inflation ? I've been intrigued by the concept of the 10 year bond being the natural rate, comprising GDP growth + inflation + risk premium.
One of the biggest problems is borrowing money. If you want to invest in your business you need to prove to the Bank its a viable investment that will pay dividends on the investment. That's very difficult to do because making a profit has become so much more difficult today. So its very difficult to borrow the money needed for the investment even if you want to.
Bank of England interest rates must come down to 2.5%. They should not have risen above 2.5%, post-Pandemic. The BoE claim that it's to control inflation is complete rubbish. The total UK mortgage debt is currently £1.66Trillion. The average mortgage holder is paying £3,600 more than they should, each year. That's a total of £41Billion, annually, going to the BoE, instead of being spent in the economy. Why is nobody seeing this!!!?
Didn't see much correlation between investment and interest rates. If investment in R&D or productive assets is deemed profitable, a couple of points in interest rates is not an issue. Very low interest rates, on the other hand, just fuel bubbles in nonproductive assets and property. In the long run positive real interest rates are best for prosperity.
I ‘m screwed by this situation. 5 year Fixed mortgage goes to 8+% this month. I can’t go interest only nor can I change the mortgage. Halifax won’t allow without wife’s consent. She doesn’t pay anything (never has) & is now up the road with ‘the milkman’ & thus no incentive. So this leaves me saddled, paralysed and pretty much finished.
I'm starting to think growth is the wrong approach. How about being small but efficient. Smaller vehicles for our congested roads. Lighter faster trains, lighter faster buses. Small efficient pod houses built for 20k, only used as rentals and never sold.
YES!! UK economy has been in free fall since BoE increased base rate like a rocket and left the economy high and dry practically overnight with no time to adapt to the rates. That decision will go down as one of the biggest mistakes in economic history and I have been saying so since it started.
I feel like the evidence of zero rates and QE over the last 30 years including Japan have showed that they don't 'control' the economy... Zero rates and massive QE barely shifted the dial... Apart from drive inflation. The government needs to unleash the private sector with lower regulations and taxes... The only things that allow the economy to grow. Too many regulations hits innovation and high taxes hits consumers (and business) propensity to consume.... Its really simple.
Surely it's the responsibility of the Government to handle the economy, not the BOE. My understanding is that the BOE is charged with handling inflation and financial stability. If the economy tanks why blame the BOE?
Many good issues highlighted in this session. From the ordinary person's viewpoint, we should ask where is and what kind of accountability is there for this subjective and arbitrary setting of the interest rate? BoE is not directly answerable to the public. Indirectly it is answerable to the Chancellor of the Exchequer and so to parliament but there is an obvious cloak of financial expertise and market credibility that no MP will risk his or her career to challenge, dispute and just say they know better from the feedback from their constituency that BoE is wrong or has pushed too far in chasing for a set range of inflation markers regardless of the cost of doing so to the public. The other matter to be aware of is to ask who has the biggest stake in the setting and in the making changes to the interest rate? Obviously this is the government. It is the biggest borrower (debt to GDP is now over 100%) and current and likely future largest single issuer of Sterling debt. Strong case to say there is a vested interest to keep interest rates low but at what cost to the lesser borrowers?
Central banks do not set interest rates. Markets do. In pursuit of following their own monetary policy, central banks may adjust the only rate they do control, which is the base rate, but the market can and do ignore it. Look what happened when The Fed cut the Fed Funds Rate - their equivalent of the BoE Base Rate - by ¼% last year. Nothing. None of the banks reduced their rates. So forget about Central Banks controlling anything. Rather, Central Banks just signal to the market their preferred outcome, and then the Markets decide what they want to do. Like yields on Gilts went up and then went back down. Knowing that gilt yields are the real signal of market sentiment, they was panic for a while, which has fallen away. So... Central banks aren't in charge; markets are.
Answer = Yes. Why does the government need to pay interest on money they've printed? Inflation in the UK is supply driven. Squeezing demand won't help, but strangle growth.
Falling real house prices and rising wages is good for the UK economy in the long run. Keeping long rates higher for longer seems a good policy to me. QT will also bring down The Bank's balance sheet from eye-watering levels, giving it more ammo for the next crisis (hopefully not). It's about time The Bank unwinds the economic damage it has caused from ZIRP. Higher long rates will also help our pensioners stabilise their futures if they buy long gilts. I would like to see The Bank target asset price inflation in the long run. The government should be doing a lot more on planning reform, levelling up and tax reform - none of these need cause budget deficits. The mantra was "Stable" government throughout the election - we can only hope that Labour under Starmer remember this mantra. I don't think they are doing too bad at the moment - time will tell.
I think I agree with increased rates but not to this level, it's put a lot of economic stress on consumers and therfore hit business. I'd say 3.5% a happy medium
Monetary Policy should be brought back under government control. Fiscal and Monetary Policies should not be considered in isolation of each other and should be managed by a single body - a duly elected and accountable body, which the BOE is not.
The Bank of England is owned by the Government and the Government appoints the directors so if it's true then the blame is on the Government. It's like you own a business, you appoint directors to run it and when something goes wrong you blame them, no it's your fault for picking the wrong people.
Japan has extraordinary low interest rates of 0.5 percent I believe and their economy doesn't seem to have collapsed into chaos. If the government had more borrowing and spending plans, investing in infrastructure and other projects that would improve the economy and make people feel more confident about spending rather than saving. The housing market needs to be excluded from all these equations as it's a law onto itself.
Interest rates are a problem and they will probably get worse because Labour are going to run out of money. The UK is broke. Spending needs to be cut at least 30%, time limits need to be introduced on claiming welfare. Many thousand of Civil Servant's need sacking. Public staff pensions need to be the same as the rest of us, why should we pay tax for their pensions which are much better than ours. 50% MPs need to be sacked and at least 50% of the House of Lords. All Foreign Aid needs to stop. Then cut taxes for business and encourage real inward investment which will never happen with high taxes. We will then start to get some real growth. The average Brit is over 40% poorer than the average American, the system over the last 30 years has failed, time for big changes....
Public sector employees paid into their pensions, they are not recipients of charity. You should have chosen an employer providing a pension and sacrificed 15% of your pay to it. Getting sore because you didn't and trying to lower everbody to your badly planned position out of jealousy doesn't help you or anyone else. The public sector have suffered massive cuts to pay over the last decade and a half while the private sector kept getting their pay rises despite stagnant productivity. There needs to be investment for growth not cuts, and not falling for the right wing's lies that set one group of society envious of another to try and lower conditions for everyone, and make them too busy arguing to see it was the stupidity of big cuts in spending by right wing ideologists in austerity, then the brexsh*t mess that caused it.
Just remember it all started under your Tory mates who’ve flogged the whole country off to the highest bidder and imported the world over the last 14 years.Short memory haven’t you !
Ah the call to cut foreign aid. Of course this ignores the fact that we screw over the world and somewhere we will get some benefit from providing the aid; we certainly don't do it out of the goodness of our hearts.
The inflation target is stupid. Some economies thrive temporarily even under 10% inflation. Government spending is ridiculously high, at rates that make sensible economies wince. No chance UK and Europe can keep over-spending like this. Major slash of budgets in the public sector is long overdue. Slash council budgets and make it illegal for them to try to raise the difference through council tax.
Seems to me that if stupid government QE money printing and rubbish government spending was not being done in the first place then we would not have these current issues 🙄
With housing they should just tax second home owners more and incentivise first time buyers more - for example distribute cheaper mortgages to first time buyers - I don’t think there is any need to lend first time buyers more though as that will just drive prices up which only helps the already wealthy
British man John Cowperthwaite created the first Asian tiger economy in Hong Kong. Singapore copied him and became the second Asian tiger. it's not rocket science. while Hong Kong and Singapore boomed. The uniparty in Britain nationalised and centralised everything, It's obvious to a child what system was better for the citizens.
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I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $200k passively by just investing through an advisor, and I don't have to do much work. Inflation or no inflation, my finances remain secure.. So I really don't blame people who panic.
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Not much sense from video. The main problem for the UK are landlords. They took half of the salary of working people. This makes salaries big on paper and not competitive with for example Chinese workers, whose rent (and all other costs) are significantly smaller.
@ exactly …landlords are demonised…but in reality the biggest beneficiaries are the banks, tax authorities and those in the construction trade. I think the problem is we lack quality/ professional landlords - we have too many rogue landlords…
Like everything else, high demand for housing and low availability means higher prices. Nothing new there. Governments happily bring in millions more to live here and do nothing towards housing them. Happening in all countries in the west. The Uk is now set to expand the population by another 5 million within a few years. It’s all unsustainable. Public services can’t cope now.
Wages stagnant since 2008, housing market is unrealistically high, bubble will burst soon. people cannot even afford to turn heating on 🤣 but houses are on the market for 600 k in London.. mental
Lets just have forever QE and ZIRP and we will see what happens. It isnt the BOE its the government thats causing the mess. Business confidence has collapsed because of UK gov tax rises, lack of plan and lack of joined up thinking.
@@velisvideos6208 there is a problem with the BREXIT theory. The UK economy has had stagnant productivity since 2008, national debt sky rocketed, and the FTSE100 index also stagnated. This was 8 years before the BREXIT referendum, and 12 years before the UK actually left the EU. The UK is still paying for the bank bailouts. The BOE will conduct more bond auctions. 100 billion in september/october 2024 alone. The EU itself isnt actually doing well either as it expands allowing free trade between it and poorer nations. I for one believe the freedoms BREXIT gave the UK was never realised because those in government want to somehow rejoin.
But keeping interest rates where they are ...prevents house price inflation. So id rather they stayed where they are. I dint care whther a punt a molo goes up or down by 10 per cent. But i do care when a home gets 10 per cent more expensive Where i am , asking prices are down. As soon as the bank of england starts really hammering down those rates..... sellers will put their asking pruces up. Bit hypocritical of the bank of england to put them rates up where they are because a trip to tesco has gone up .....but push the rates down even as house prices go up. Good job then that the evil bassssstrds dont measure house price inflation or rent inflarion..... very convenient
Lets get this right. There is nothing unusual in rates of 4.75 per cent. The current rate is almost bang on average. The only people who want rates going down are debt junkies who own property bought with credit which till only recently was offered at RIGGED rock bottom rates Its nice to watch priperty pruces in my part of essex drop , amd itts nice to see my savings for a deposit get some dammmned interest for change. If you dont like dates where they are cos its costing you a packet....then you shouldn't have borrowed so much and paid rip off prices.
The minimum people should pay interest 6 %and hard working public who save money 💰 should earn at least 5% interest that way house price index will not increase and general public will be able to buy houses in future, by keeping interest rates low house prices go upwards, banks make profit and loses and gamble public money losing in America 🇺🇸 or other risky countries or projects, sorry the public must get ready to pay for future of affordable home's in future,genral public should know money is not for free so they can buy expensive home's.
At 2:05 I said inflation was set to fall this year. But, when I got Bank of England inflation forecast, they actually expect headline rate to rise to 2.8% by Sep, before falling back to 2%. Core inflation is set to fall this year.
I think the reality is that they don’t know, it’s just their best guess!
Interest rates "have not been falling" over the last several decades. Instead, the government has dictated interest rates at ever lower levels. There's a big difference there. Interest rates are not happening like the weather does, they are deliberately dictated by specific idnividuals.
Inflation today is 2.5% with several price increases imminent....looks set to reach 4%.
Q4 figure for 2024...not yet announced,...it's at minus 0.2% currently....with December stat. due soon.
Uk wages: Stagnant for 15+ years.
Business: It's great!
Uk wages: Increase very slightly over the short term.
Business: The sky is falling!
Do me a favour...
All these issues stem from an economy grappling with uncertainties, including housing problems,foreclosures, global fluctuations, and the aftermath of the pandemic, leading to instability. Rising inflation, sluggish growth, and trade disruptions demand urgent attention from all sectors to restore stability and stimulate growth.
In retirement, safeguarding your wealth against inflation is essential. Consider options like TIPS (Treasury Inflation-Protected Securities), commodities, or foreign currencies to hedge against a weakening dollar. Diversifying your portfolio with global real estate, international bonds, or high-quality foreign stocks can provide additional protection and growth opportunities in an inflationary environment.
My busy career leaves little time for investment analysis. For the past seven years, a fiduciary has managed my portfolio, skillfully adjusting to market changes and ensuring informed, successful decisions. You might consider a similar strategy.
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Jennafer Beaver Turner is the licensed advisor I use.
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The European Central Bank interest rate will be at 2.75% tomorrow when they cut by 0.25%.
The Bank of England interest rate is 4.75% a whole 2% higher than a comparable economy to ours and arguably a hostile economy to ours.
The BOE are paralysed with inflation fear so a recession is incoming!
In the past it seemed that the Bank of England was on the ball when it came to setting rates but they have been asleep at the wheel over the past 4 or 5 years. They kept interest rates too low following the pandemic when it was clear that inflationary pressures where building up and more recently have been slow to cut rates when its clearly the economy is struggling. As things stand, I think there is a good chance the UK will be in recession in 2025.
Do get the feeling they were either not paying attention or simply too scared to "pull the levers" too soon, preferring to see what the Europe and the US did every single time, classic case of "Nevermind what he's doing, you concentrate on your own work!", LOL! The constant dithering I believe is partly the reason we're in a bit of a mess. However they do seem to have woken a up a bit in the last 12 months and actually started paying attention again.
I dont think they did keep them too low. As it states in the video, it was cost push inflation, which interest rates cannot resolve. In contrast, the Bank of Japan did not increase interest rates, and the government used fiscal policy to cushion the impacts. The inflation was transitory, as supply constraints resolved, and dropped again naturally. That was a viable option for the BoE, but it chose to follow the herd. Now its foolishly sticking to higher rates, which only makes a recession more likely.
it's inconceivable how Christine Lagarde appears to understand the economy better than Powell or Bailey with their transitory nonsense.
That's because the current governor is actually the super villain from Dangermouse
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I will be forever grateful to you, you changed my whole life and I will continue to preach on your behalf for the whole world to hear that you saved me from huge financial debt with just a small Investment, thank you Jihan Wu you're such a life saver
As a beginner in this, it’s essential for you to have a mentor to keep you accountable.
Jihan Wu is also my trade analyst, he has guided me to identify key market trends, pinpointed strategic entry points, and provided risk assessments, ensuring my trades decisions align with market dynamics for optimal returns.
Jihan Wu Services has really set the standard for others to follow, we love him here in Canada 🇨🇦 as he has been really helpful and changed lots of life's
His guidance allowed me to restructure my retirement plan, resulting in an estimated $700,000 more by the time I retire.
The BOE has been behind the curve for a long time. They were slow to increase rates. In a blind panic they increased rates way beyond where they needed to be. I think 4.5% should have been the peak, and we would now be at around 3.75 -4%, which feels about right. The main driver of growth in this country is consumer spending. If people's mortgages have doubled, then that money is missing from the economy, and everything will flatline. It's not just mortgages, general finance rates have more than tripled. If a business needs to purchase vehicles or kit, the rates are crazy! In my opinion, the BOE have completely stifled the UK economy. If Rachel Reeve's wanted to help working families and to show real leadership, she should invoke Section 19 of the BOE Act and force the Bank to lower interest rates by at least 0.5%.
We need business back. We need to lower the taxes so it brings business back to our shores, you will need to keep interest rates the same to keep inflation at bay, this is key, but unfortunately we have a very incompetent party in power that don’t do either those things. Stupid idiots labour.
Cutting spending will do zilch, defecit spending will spook the markets, tax rises will kill the economy. The only choice is ‘nothing’. Austerity really did brutalise the Uk government, cutting departments to there bare bones so they are ineffective while simultaneously cutting taxes and deficit spending somehow. It truly was the worse policy enacted by any government. If labour can somehow salvage the mess it will be a miracle
Thanks!
Why are you not talking about Wealth Inequality, it's clear as day that's the problem
So how does Equality work in a country that adds 1.5 Million completely unskilled penny less majority unemployable people to the society each each.?
The current system is setup for wide scale poverty and zero growth and capital flight...
How so?
@@Marek-o3u how so? look at "public" debt it certainly hasnt gone on services and infrastructure has it
@thepandasdoitbetter we don't make any money. Taxing wealth won't work we need productivity. Effective tax rate already 78%. If it were me, I wouldn't work. Oh wait, I don't. But I don't expect to live of others either. Every failed communist state, and that's all of them, Convinced people that they could have more if they took everything from the rich. You eventually run out of others money. The rich end up being anyone with a job. Or a bit of land. Or a horse.
@@Marek-o3u Because if the richest have most of the money they can just buy all the assets and the country became an extractive economy. No real investments, just milking the cow. They can get their GDP growth up there a22 if all that growth just go to the pockets of the renters.
Interest rates aren't just supposed to control inflation, they also (IMO mainly) control over-leveraging. We're in excessive debt and lowering rates would incentivise more debt.
Both public and private debt btw.
Made, i’m sure you are aware that the ONS do not correctly measure CPIH as they elegantly refuse to measure the accurate housing costs, as we otherwise would be way higher than any other comparable economy anywhere. Rather than rent and mortgages, they measure something they call rent-equivalent which (surprise surprise) is way lower than actual housing costs. So as often before, they fake it to look good.
Exactly as the U.K. authorities claim we have the best drinking water in the world (along with 3 other countries), allegedly way better water than in Scandinavia, Switzerland, Austria and other countries famed for the best drinking water in the world. It’s obviously also lies, or obfuscation of facts, mostly to make it look like the politicians knows what they are doing.
Just this morning I read the dimwit Rachel Reeves saying she will make Britain the European Silicon Valley. She knows as much about creating centres of excellence in fields of technology as I do about open heart surgery. Nobody leaving a British university can afford to tinker around with potentially ground breaking tech, as they are up to tonsils in debt, and desperately need jobs to start paying, if not to be hampered with debt for rest of their lives, and British banks do not offer youngsters any upcoming inventor money either, as they focus on bumper profits. Fake fake fake, and then more fake….
Obviously yes.
Inflation at 2% with rates near 5% is absurd.
I chose the Bank of England in your poll.
The Tories are just a face.
same here
9.45 you mentioned you cant increase BR to lower cost of energy. But aren't you forgetting that we're a net importer of energy and the pounds value matters so higher interest rate helps increase the pounds value lowering energy costs.
Very informative - Thank you!
Get 20+ million people into 20-35 year mortgages are 1-2% interest rates... Then up interest rate to 3-5%.... Not good for anyone at all. Weak spending power is bad for business and the consumer.
intrest rates are normal .it was abnormal for many years
It's by no means normal for interest rates to be 3% higher than inflation ..
Cameron absolutely wasted those years
Historically yes however there is absolutely no reason to have interest rates so much higher than inflation.
💯 % over the target .... elephant 🐘 in the room ...rent inflation.... 🤤
@ Agreed CPIH needs to be used as standard inflation figure not CPI, it's pretty useless using CPI when the single biggest spend of income is spent on housing!
If you look at the historical average, the rate is around 6%. These near zero rates we've seen ever since 2008 have been completely unprecedented.
No it's not. The historic average since 1693 is 4.1%.
@@stephfoxwell4620do see interest rates going back to near zero anytime soon?
Great presentation. Thanks.
The normalisation of interest rates is not the problem, it just exposes the problem, we have gone through a prolonged period of artificially stimulating growth and asset prices with central bank policies of financial engineering manipulating interest rates and bond yields which enriched a small fraction of society, indebted the majority who leverage themselves and now are left servicing their debts at market driven rate.
We are likely going through a extended period of very low growth, asset price contraction until the debt burden get digested into the economy.
High interest rate = Higher mortgages and loans.= less spare income to buy goods/expand businesses. Selling less goods and services = lower employment = less taxes collected = more housing benefits, unemployment and other claims on less taxes collected.
I haven’t watched the video, but I will give a informed view on why we should be worried about Bank of England stance. Let’s understand that through thatcher, banking in London was revolutionary for the country and city, we know about the washing of bad money, we get it. But since 2008, and especially since post brexit. U.K. banking is essentially trying to a financial product, e.g first i phone and Google search engine, mild updates were made from a banking point of view, but the rest of the world were surpassing, by now using I phone 16 and ChatGPT. The product and productivity is none existent and this is the last throws of the Bank of England to go down swing, im right, you’re wrong. The financial sector is really trying to justify the wage, but like us in the middle class it’s gone, they just can’t accept that. The trick that work so well for 40yrs is gone and they can’t accept that, but somehow they need the big bucks to turn it around, when U.K. need to redraft and look long and hard what this economy is all about. In essence you might as well have a military state, because it will then be the banks that will tell us what we should spend on education, healthcare, infrastructure. This will then further divide the wealth gap and the banks will further deregulate in an aim of GDP or some measurement that won’t reflect Day to day life in the U.K..
It looks like they're running some sort of quasi peg to the $US
Obvious to me just not targeting wealth and the people with money are not affected by rates anyway.
It's the craziest off course ship I've ever seen and it's heading for the waterfall at full speed. They still continue to target the bottom while mid to high end earners are piling the cash.
What do you think is going to happen when rates drop? All that saved up cash is going to be dumped into assets which will drive inflation to the moon in terms of housing and luxury spending.
To me it's why the bank of England isn't keen on reducing rates they're really worried that people will start spending like crazy. They're really hoping government bring out policies that reduce that money being dumped but they're hopeless.
Rising wages are just from lack of investment in education from the government and firms.
So when you have a few trained people getting hammered by crazy inflation you walk unless your wages go up. The firms are hemeraging talent so they start giving pay rises.
I just think the government just continue walking blindfolded through a raging fire.
The solution is easy you reward people for investing in UK firms and give tax breaks to companies that train and grow their work force. You also target the vast wealth some people have either by tax investigations or means testing the state pension.
The country needs big ideas probably too late to save to be honest. We've had 15 years of passing the problem to the next guy.
Lowering interest rates will just sky rocket house prices once more. The whole problem has been the ease of borrowing an extra £50k on a mortgage at a cost of an extra £150 per month. Savings and real ownership need to be incentivised not an endless system of managing monthly repayments,
So what is the correct level for interest rates ? Inflation ?
I've been intrigued by the concept of the 10 year bond being the natural rate, comprising GDP growth + inflation + risk premium.
As the UK economy gets worse Economics Help viewership grows more.
One of the biggest problems is borrowing money. If you want to invest in your business you need to prove to the Bank its a viable investment that will pay dividends on the investment. That's very difficult to do because making a profit has become so much more difficult today. So its very difficult to borrow the money needed for the investment even if you want to.
Bank of England interest rates must come down to 2.5%.
They should not have risen above 2.5%, post-Pandemic.
The BoE claim that it's to control inflation is complete rubbish.
The total UK mortgage debt is currently £1.66Trillion.
The average mortgage holder is paying £3,600 more than they should, each year.
That's a total of £41Billion, annually, going to the BoE, instead of being spent in the economy.
Why is nobody seeing this!!!?
It’s going to the banks not BoE - record profits will be reported.
Didn't see much correlation between investment and interest rates.
If investment in R&D or productive assets is deemed profitable, a couple of points in interest rates is not an issue.
Very low interest rates, on the other hand, just fuel bubbles in nonproductive assets and property.
In the long run positive real interest rates are best for prosperity.
Exactly.
Gold is money everything else is credit…
no its not.
The Finnish word for money "raha" originally meant a squirrel skin. So, I guess here skins are money and everything else is rubbish.
Gold is wealth and all other money is debt
I ‘m screwed by this situation. 5 year Fixed mortgage goes to 8+% this month. I can’t go interest only nor can I change the mortgage. Halifax won’t allow without wife’s consent. She doesn’t pay anything (never has) & is now up the road with ‘the milkman’ & thus no incentive. So this leaves me saddled, paralysed and pretty much finished.
This is criminal behaviour by the BoE. Raising rates so high and fast after the stability of rates for 15 years. Sad to hear your story.
I'm starting to think growth is the wrong approach.
How about being small but efficient. Smaller vehicles for our congested roads. Lighter faster trains, lighter faster buses.
Small efficient pod houses built for 20k, only used as rentals and never sold.
Lower salaries so we can control overconsumption….😂
@@kalex381 A lot of managers are not worth what they are paid
ladas and pod houses …….. sounds like marxism/communism to me
YES!! UK economy has been in free fall since BoE increased base rate like a rocket and left the economy high and dry practically overnight with no time to adapt to the rates. That decision will go down as one of the biggest mistakes in economic history and I have been saying so since it started.
I heard the interest we pay per year is higher than the annual GDP of the UK.
Thats the clues cheers mate
I feel like the evidence of zero rates and QE over the last 30 years including Japan have showed that they don't 'control' the economy... Zero rates and massive QE barely shifted the dial... Apart from drive inflation.
The government needs to unleash the private sector with lower regulations and taxes... The only things that allow the economy to grow. Too many regulations hits innovation and high taxes hits consumers (and business) propensity to consume.... Its really simple.
Surely it's the responsibility of the Government to handle the economy, not the BOE. My understanding is that the BOE is charged with handling inflation and financial stability. If the economy tanks why blame the BOE?
Many good issues highlighted in this session. From the ordinary person's viewpoint, we should ask where is and what kind of accountability is there for this subjective and arbitrary setting of the interest rate? BoE is not directly answerable to the public. Indirectly it is answerable to the Chancellor of the Exchequer and so to parliament but there is an obvious cloak of financial expertise and market credibility that no MP will risk his or her career to challenge, dispute and just say they know better from the feedback from their constituency that BoE is wrong or has pushed too far in chasing for a set range of inflation markers regardless of the cost of doing so to the public.
The other matter to be aware of is to ask who has the biggest stake in the setting and in the making changes to the interest rate? Obviously this is the government. It is the biggest borrower (debt to GDP is now over 100%) and current and likely future largest single issuer of Sterling debt. Strong case to say there is a vested interest to keep interest rates low but at what cost to the lesser borrowers?
Central banks do not set interest rates. Markets do. In pursuit of following their own monetary policy, central banks may adjust the only rate they do control, which is the base rate, but the market can and do ignore it. Look what happened when The Fed cut the Fed Funds Rate - their equivalent of the BoE Base Rate - by ¼% last year. Nothing. None of the banks reduced their rates. So forget about Central Banks controlling anything. Rather, Central Banks just signal to the market their preferred outcome, and then the Markets decide what they want to do. Like yields on Gilts went up and then went back down. Knowing that gilt yields are the real signal of market sentiment, they was panic for a while, which has fallen away. So... Central banks aren't in charge; markets are.
Answer = Yes. Why does the government need to pay interest on money they've printed? Inflation in the UK is supply driven. Squeezing demand won't help, but strangle growth.
Falling real house prices and rising wages is good for the UK economy in the long run. Keeping long rates higher for longer seems a good policy to me. QT will also bring down The Bank's balance sheet from eye-watering levels, giving it more ammo for the next crisis (hopefully not). It's about time The Bank unwinds the economic damage it has caused from ZIRP. Higher long rates will also help our pensioners stabilise their futures if they buy long gilts. I would like to see The Bank target asset price inflation in the long run. The government should be doing a lot more on planning reform, levelling up and tax reform - none of these need cause budget deficits. The mantra was "Stable" government throughout the election - we can only hope that Labour under Starmer remember this mantra. I don't think they are doing too bad at the moment - time will tell.
Totally agree.
I think I agree with increased rates but not to this level, it's put a lot of economic stress on consumers and therfore hit business. I'd say 3.5% a happy medium
My vote is for rates to stay at this level or go higher
Monetary Policy should be brought back under government control.
Fiscal and Monetary Policies should not be considered in isolation of each other and should be managed by a single body - a duly elected and accountable body, which the BOE is not.
The Bank of England is owned by the Government and the Government appoints the directors so if it's true then the blame is on the Government. It's like you own a business, you appoint directors to run it and when something goes wrong you blame them, no it's your fault for picking the wrong people.
Primary problem is bad government spending and no wealth taxation.
Japan has extraordinary low interest rates of 0.5 percent I believe and their economy doesn't seem to have collapsed into chaos. If the government had more borrowing and spending plans, investing in infrastructure and other projects that would improve the economy and make people feel more confident about spending rather than saving. The housing market needs to be excluded from all these equations as it's a law onto itself.
Interest rates are a problem and they will probably get worse because Labour are going to run out of money. The UK is broke. Spending needs to be cut at least 30%, time limits need to be introduced on claiming welfare. Many thousand of Civil Servant's need sacking. Public staff pensions need to be the same as the rest of us, why should we pay tax for their pensions which are much better than ours. 50% MPs need to be sacked and at least 50% of the House of Lords. All Foreign Aid needs to stop. Then cut taxes for business and encourage real inward investment which will never happen with high taxes. We will then start to get some real growth. The average Brit is over 40% poorer than the average American, the system over the last 30 years has failed, time for big changes....
Abolsute terrible policies, that is just Thatcherism 2.0
Public sector employees paid into their pensions, they are not recipients of charity. You should have chosen an employer providing a pension and sacrificed 15% of your pay to it. Getting sore because you didn't and trying to lower everbody to your badly planned position out of jealousy doesn't help you or anyone else. The public sector have suffered massive cuts to pay over the last decade and a half while the private sector kept getting their pay rises despite stagnant productivity. There needs to be investment for growth not cuts, and not falling for the right wing's lies that set one group of society envious of another to try and lower conditions for everyone, and make them too busy arguing to see it was the stupidity of big cuts in spending by right wing ideologists in austerity, then the brexsh*t mess that caused it.
Just remember it all started under your Tory mates who’ve flogged the whole country off to the highest bidder and imported the world over the last 14 years.Short memory haven’t you !
Attack your own pension and ask your boss to sack you too while you’re at it.
Ah the call to cut foreign aid. Of course this ignores the fact that we screw over the world and somewhere we will get some benefit from providing the aid; we certainly don't do it out of the goodness of our hearts.
What grow the economy fast? Rejoin the European union single market and customs union.
The inflation target is stupid. Some economies thrive temporarily even under 10% inflation. Government spending is ridiculously high, at rates that make sensible economies wince. No chance UK and Europe can keep over-spending like this. Major slash of budgets in the public sector is long overdue. Slash council budgets and make it illegal for them to try to raise the difference through council tax.
Inflation is not an issue for economies that grow. When you have a growth of less than 1% a 10% inflation is a catastrophe.
Isn’t that the whole point of raising interest rates? If the economy wasn’t slowing down then what would be the point of raising them.
Inflation may be 2% in a particular month, but has been much higher some months taking the last cumulative yearly inflation to 27%!
Inflation is on the up
Just buying things tells me it’s going a lot higher 5/6% before July
Wealth inequality that is whats wrong
Seems to me that if stupid government QE money printing and rubbish government spending was not being done in the first place then we would not have these current issues 🙄
With housing they should just tax second home owners more and incentivise first time buyers more - for example distribute cheaper mortgages to first time buyers - I don’t think there is any need to lend first time buyers more though as that will just drive prices up which only helps the already wealthy
British man John Cowperthwaite created the first Asian tiger economy in Hong Kong. Singapore copied him and became the second Asian tiger. it's not rocket science. while Hong Kong and Singapore boomed. The uniparty in Britain nationalised and centralised everything, It's obvious to a child what system was better for the citizens.
Yes, that was in 1961....think he abolished income taxes.
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If we want housing market prices to take off again ✈️than go for it lets lower rates again .
Inflation is going up and pound down so BoE can’t cut much. It’s a stagflation rut .
Inflation target should be 0%.
Not much sense from video. The main problem for the UK are landlords. They took half of the salary of working people. This makes salaries big on paper and not competitive with for example Chinese workers, whose rent (and all other costs) are significantly smaller.
Exactly this. People in jobs have nothing to spend in the economy.
And then landlords pay half the money they take as interest to the banks and then taxes to the government,,,,
Landlords pay CGT on their properties and tax on their income and 40% IHT
@ exactly …landlords are demonised…but in reality the biggest beneficiaries are the banks, tax authorities and those in the construction trade. I think the problem is we lack quality/ professional landlords - we have too many rogue landlords…
Like everything else, high demand for housing and low availability means higher prices. Nothing new there. Governments happily bring in millions more to live here and do nothing towards housing them. Happening in all countries in the west. The Uk is now set to expand the population by another 5 million within a few years. It’s all unsustainable. Public services can’t cope now.
Wages stagnant since 2008, housing market is unrealistically high, bubble will burst soon. people cannot even afford to turn heating on 🤣 but houses are on the market for 600 k in London.. mental
Lets just have forever QE and ZIRP and we will see what happens. It isnt the BOE its the government thats causing the mess. Business confidence has collapsed because of UK gov tax rises, lack of plan and lack of joined up thinking.
Forgot Brexit, mate.
@@velisvideos6208 there is a problem with the BREXIT theory. The UK economy has had stagnant productivity since 2008, national debt sky rocketed, and the FTSE100 index also stagnated. This was 8 years before the BREXIT referendum, and 12 years before the UK actually left the EU. The UK is still paying for the bank bailouts. The BOE will conduct more bond auctions. 100 billion in september/october 2024 alone. The EU itself isnt actually doing well either as it expands allowing free trade between it and poorer nations. I for one believe the freedoms BREXIT gave the UK was never realised because those in government want to somehow rejoin.
But keeping interest rates where they are ...prevents house price inflation.
So id rather they stayed where they are.
I dint care whther a punt a molo goes up or down by 10 per cent. But i do care when a home gets 10 per cent more expensive
Where i am , asking prices are down.
As soon as the bank of england starts really hammering down those rates..... sellers will put their asking pruces up.
Bit hypocritical of the bank of england to put them rates up where they are because a trip to tesco has gone up .....but push the rates down even as house prices go up.
Good job then that the evil bassssstrds dont measure house price inflation or rent inflarion..... very convenient
#AbolishBoE
Lets get this right. There is nothing unusual in rates of 4.75 per cent.
The current rate is almost bang on average.
The only people who want rates going down are debt junkies who own property bought with credit which till only recently was offered at RIGGED rock bottom rates
Its nice to watch priperty pruces in my part of essex drop , amd itts nice to see my savings for a deposit get some dammmned interest for change. If you dont like dates where they are cos its costing you a packet....then you shouldn't have borrowed so much and paid rip off prices.
Bank of England tea leafs
Brexit not a choice?
The minimum people should pay interest 6 %and hard working public who save money 💰 should earn at least 5% interest that way house price index will not increase and general public will be able to buy houses in future, by keeping interest rates low house prices go upwards, banks make profit and loses and gamble public money losing in America 🇺🇸 or other risky countries or projects, sorry the public must get ready to pay for future of affordable home's in future,genral public should know money is not for free so they can buy expensive home's.
What are you talking about inflationis low? Everything in the shops are expensive.