Interest rate rise could push inflation higher, warns Item - Telegraph
With the headline rate of inflation double the target at 4pc, many in the markets believe the Bank of England could raise rates from their record low as soon as next month, in a bid to rein in rising prices.
However, doing so risks triggering the feared "wage price spiral", the vicious circle where attempts to keep people's pay in line with rising prices push inflation even higher, Item has argued.
The knock-on effect of a rate rise on mortgage payments, as well as putting pressure on households, could force wages to finally start climbing at the wrong time, the group of economists fears.
Eh?
So, inflation is high, raise interest rates means people's mortgage payments go up, so they want a pay rise, so this fuels inflation etc.
What utter bollox.
By this measure we should print everyone a billion pounds each, we'd all be rich and wouldn't need pay rises, so inflation would fall to zero.
Logic worthy of the tag Cretin and Village Idiot.
With the headline rate of inflation double the target at 4pc, many in the markets believe the Bank of England could raise rates from their record low as soon as next month, in a bid to rein in rising prices.
However, doing so risks triggering the feared "wage price spiral", the vicious circle where attempts to keep people's pay in line with rising prices push inflation even higher, Item has argued.
The knock-on effect of a rate rise on mortgage payments, as well as putting pressure on households, could force wages to finally start climbing at the wrong time, the group of economists fears.
Eh?
So, inflation is high, raise interest rates means people's mortgage payments go up, so they want a pay rise, so this fuels inflation etc.
What utter bollox.
By this measure we should print everyone a billion pounds each, we'd all be rich and wouldn't need pay rises, so inflation would fall to zero.
Logic worthy of the tag Cretin and Village Idiot.
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