3 ms·
> These rate rises are starting to feel political in the UK and US. They are deeply political. The interest rates would have to be significantly higher, parti
by the_mitsuhiko 4y ago
> These rate rises are starting to feel political in the UK and US.
They are deeply political. The interest rates would have to be significantly higher, particularly in the UK, but actually going there would do other damage. So they are trying to go as high as possible, without losing support of the businesses.
- blitzar 4y agoIf UK interest rates were at their non political, independant level (~ double their current level) - the survival of the UK as a going concern would be in jeopardy and the government would step in and make the rate setters a political no longer independent body. The governement already spends 80bn on the interest bill each year (against a budget of ~1,000bn); despite 20 years of being able to issue debt at effectively 0%.
- darkerside 4y agoIs there such a natural level for interest rates?
- blitzar 4y agoYes, but its economic theory ... so no. https://en.wikipedia.org/wiki/Neutral_rate_of_interest https://en.wikipedia.org/wiki/Neutral_rate_of_interest (also known as r*) Naturally I have taken a few liberties with the theory - inflation +/- r* would be the correct rate for the economy. As a quick calculation, it wouldnt be unfair to say interest rate == inflation is a balanced monetary policy.