I reckon that base rate increases are helping to contribute to inflation now, because people are demanding higher salaries to pay for mortgages and rent. Which is the opposite of the intention when raising rates.
Whilst the BoE are following the book, I don’t think Hunt knows what he is doing as chancellor.
Inflation, tax and partygate will lead to Labour taking over at next election. Almost seems inevitable now.
Add to that that one of Sunak 5 promises was to halve inflation by the end of the year...
The gov and the BoE just don't have many leavers or controls over it but love to claim credit when all goes well.
They could help people with mortgages, but they aren't & won't, the longer it goes on the longer our mad system of 2 - 5 year fixed term mortgages run out the clock and people just can't pay because their rate goes from 1.5% to 6%; they move to interest only (trying to put off the problem), repossessions go up, selling up, renters get screwed as investment props go bad, housing crash (but not as low to actually be a correctionon of the inflated market) etc. etc. etc.
How long before we're playing 'Negative Equity' bingo?
And "halving inflation" is a weasly commitment anyway because inflation is an annual figure. So by the end of the year we'll be comparing to December 2022, when inflation was 10% and prices had already increased a lot.
In other words, he was really saying: "In 12 months, I promise that prices will only be 5% higher than they are right now."
Doesn't really seem very ambitious when put like that, does it?
Yeah the "wages demands drive inflation" is a nonsense and always has been. The "Wage/price" spiral is seized on as a justifcation for trying to supress wages to "control inflation".
The real issue here is the Central Banks, including the Bank of England, have fucked up and are trying to blame anyone but themselves. This is often what happens when they fuck up. We're in an inflationary mess because they did not react soon enough and hard enough to the inflationary pressures that have driven this including energy price shocks (due to Russia invading Ukraine), supply chain disruption due to Covid (and overlong Zero Covid policies in China in particular worsening that problem), and the chronically low interest rates since the financial crisis which have driven money supply. Brexit has also likedly exacerbated this for the UK as prices have also been pushed up by closing ourselves out of the EU common market.
Wage demands are a symptom of the problem, not the cause. Interest rates need to go up higher and we are facing a recession; something that might have been avoided if the BoE had acted sooner.