Elcarajillo It is not that long ago that I rates went to 15%
In fairness it was about 30 years ago and part of a very bad decision by Major and the chancellor of the time. I think made the currency speculators a lot of money.
The real problem with raising interest rates to combat inflation….it doesn’t actually work, and I’m not sure it ever did (at least for the last 35 years). My personal belief is that when things are tough raising interest rates simply fuels inflation, especially when house prices are high multiples of salary, or loads are extended well beyond 25 years….as they are nowadays. Raising interest rates is a very lazy way to try and achieve something.
More creative ways to curb inflation are to remove certain things that make everything more expensive. One simple example is fuel duty. The genius Sunak cut 1p or 2 p or 3 p, or 4p but 5p off a litre and as the price went by more than 5p the moment he did it…it would have had no inflationary damping affect (and I’m not sure a 5p cut for everyone would have either). However, to have reduced fuel duty by a significant % e,g, 30% on commercial fuel, rebate on recpts, this would have a direct impact on prices of all the follow on goods and services, and probably cost a similar amount as the useless, but good looking 5p per litre deduction.
Our politicians and the central bank are lazy and lack creativity, one of the key things that should have been done 35 years ago was curb rising house prices. This would have been achieved by making it effectively illegal to offer a longer payment term than 25 years and a larger multiple than 2.5 to 3 times salary (single or combined). Enforcement of this would have been easy too, as anyone who was lent a higher multiple, by law could refuse to pay it. House prices then couldn’t have risen at the rate they have and people would not have got themselves in trouble, together with a big source of inflationary pressure removed from society. Instead people are in hock for 30+ years with a massive lifetime debt….only one group really gets rich from this.