BoE duty bound to trigger recession?

[River Don]

https://www.theguardian.com/business/2022/may/01/bank-of-england-duty-bound-to-trigger-recession-to-curb-inflation

It's pretty clear we're already heading into a recession, why make it worse?

Particularly when clamping down on demand in the UK will have next to no effect on international energy prices.

[Glyn_Wigley]

Contracting disposable income will reduce energy demand.

[BillyStubbsTears]

There are two main components to the current inflation. Global commodity costs and domestic demand rebounding post-COVID.

Both of those should be transient. So inflationary pressures should fade away over time.

In that light, dramatically raising interest rates to choke off demand and curb I flatiron would be a massive overreaction.

[River Don]

Contracting disposable income will reduce energy demand.

Yes. So why raise interest rates?

[big fat yorkshire pudding]

One overlooked matter is actually what's happening to the dollar.  The dollar has gone through the roof of late and that's going to cause problems in itself given how many markets are based around it (eg oil).

[SydneyRover]

One way to help would be to open up immigration, reduce the worker shortage and boost production. Are there any trading blocs nearby we could join to make goods cheaper?

[BillyStubbsTears]

Contracting disposable income will reduce energy demand.

Yes. So why raise interest rates?

Because there is an inbuilt conservativism in many Central Banks that sees inflation as their biggest enemy, rather than loss of economic growth. That can work if you also have a Govt prepared to support growth through public spending. But we have Sunak in charge of that angle. He's a committed Austerian.

[Glyn_Wigley]

Contracting disposable income will reduce energy demand.

Yes. So why raise interest rates?

It raises the cost of borrowing so also reduces disposable income, especially of those with a mortgage.

[River Don]

Contracting disposable income will reduce energy demand.

Yes. So why raise interest rates?

It raises the cost of borrowing so also reduces disposable income, especially of those with a mortgage.

I think the rise in energy and food costs are already reducing disposable income significantly. The retailers are already seeing people cutting back.

[River Don]

I think they are wanting to deal with inflation but what we are facing is stagflation.

The huge rises in the cost of energy and fuel are rippling through the global economy.

There's not a lot you can do about stagflation is there?

[roversdude]

Think we need to look at how other nations have dealt with energy pricing rather than pass everything on to the end user. Then again how many tories will be milking this and making money

[BigH]

I think they are wanting to deal with inflation but what we are facing is stagflation.

The huge rises in the cost of energy and fuel are rippling through the global economy.

There's not a lot you can do about stagflation is there?

There is RD; a targeted growth strategy.

That would require a degree of strategic thinking around investment and funding that has been singularly lacking from this government to date.

[River Don]

The only growth strategy likely to work in this situation is cheaper energy. I don't see any easy ways of delivering that quickly.

[Glyn_Wigley]

If only we had a source of energy just sitting underground that we could dig up for ourselves and so not be beholden to foreign countries for our energy needs.

[River Don]

If only we had a source of energy just sitting underground that we could dig up for ourselves and so not be beholden to foreign countries for our energy needs.

It's not going to be an inexpensive solution, not easy to start up again and it's particularly polluting.

Opening up new fields in the North Sea seems to be the preffered option. Even then though, it'll be sold on the international markets, meaning significantly lower prices are unlikely.

[BillyStubbsTears]

The only growth strategy likely to work in this situation is cheaper energy. I don't see any easy ways of delivering that quickly.

We could start by massive Govt investment in uprating home insulation.

We could also allow onshore wind turbine development. Both of those decisions would get money circulating round the economy, boosting jobs, and reducing our dependence on foreign fossil fuels
 

[River Don]

The only growth strategy likely to work in this situation is cheaper energy. I don't see any easy ways of delivering that quickly.

We could start by massive Govt investment in uprating home insulation.

We could also allow onshore wind turbine development. Both of those decisions would get money circulating round the economy, boosting jobs, and reducing our dependence on foreign fossil fuels
 

Certainly they could roll out an insulation programme this summer which might help a lot of people this winter.

They have been resisting this idea for a longtime, instead offering subsidy for heat pumps, which won't be effective unless you have a well insulated house!

[big fat yorkshire pudding]

The only growth strategy likely to work in this situation is cheaper energy. I don't see any easy ways of delivering that quickly.

We could start by massive Govt investment in uprating home insulation.

We could also allow onshore wind turbine development. Both of those decisions would get money circulating round the economy, boosting jobs, and reducing our dependence on foreign fossil fuels
 

Never had an issue with wind turbines until I camped at a site with one in the next field last year.  Horrendous noise it made, wouldn't want that next door to my house at all.  We've plenty more offshore space we could use first.

[Colemans Left Hook]

just who invented the definition of a recession  ? A word at a stroke implying "doom and depression"

yes a lot  of posters on here have gums that are in recession  ( ok receeding  but it sounds gud )

definition
a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

CLH says so wot !!

ok i am going to invent a new buzz word  (copyright CLH)

a Tricession

a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in three  successive quarters

as i said a recession is a nice word to spread doom and depression - trouble is very few people know what the definition is


the defintion reminds me of our current definition of "shots on target" in a football match 

A football fans definition of a shot on target includes when a defender blocks a shot on target  etc - but to the doomsters (The Sports Press Football TV commentators etc) who are trying to make out a teams performance is worse than it is ..... and to make a "cheap fake headline" ... they invent the "new" definition.  An obvious target at the moment would be Man U or even the England team


ask the man in the street what the definition of a recession is and he aint got a clue .. but it sounds GUD  as i say

rant over

[SydneyRover]

The off-season getting into full swing I see

[Colemans Left Hook]

The off-season getting into full swing I see

but do you agree yes or no  -- you typed before you had time to actually read the thread

sorry mate you have been caught out

i was thinking of you when i came across the domain in sydney Australia during the night 

[SydneyRover]

Not more than the first line no, correct

[River Don]

In 1974, American economist Julius Shiskin came up with a few rules of thumb to define a recession: The most popular was two consecutive quarters of declining GDP. A healthy economy expands over time, so two quarters in a row of contracting output suggests there are serious underlying problems, according to Shiskin. This definition of a recession became a common standard over the years.

[Colemans Left Hook]

thanks for that

there is a top quality national hunt horse with that same name -- that explains it

"Never in the history of posting on the drfc-vsc website have so many - sport of kings followers -  learnt so much from a single post"

 I am sure a commentator at The Cheltenham Festival next year would love to drop that fact into his commentary 

[River Don]

Shishkin.

The Russian word for Pinecone apparently.

[SydneyRover]

Are you sure RD?

[Glyn_Wigley]

just who invented the definition of a recession  ? A word at a stroke implying "doom and depression"

yes a lot  of posters on here have gums that are in recession  ( ok receeding  but it sounds gud )

definition
a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

CLH says so wot !!

ok i am going to invent a new buzz word  (copyright CLH)

a Tricession

a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in three  successive quarters

as i said a recession is a nice word to spread doom and depression - trouble is very few people know what the definition is


the defintion reminds me of our current definition of "shots on target" in a football match 

A football fans definition of a shot on target includes when a defender blocks a shot on target  etc - but to the doomsters (The Sports Press Football TV commentators etc) who are trying to make out a teams performance is worse than it is ..... and to make a "cheap fake headline" ... they invent the "new" definition.  An obvious target at the moment would be Man U or even the England team


ask the man in the street what the definition of a recession is and he aint got a clue .. but it sounds GUD  as i say

rant over

Who gives a shit what 'the man in the street' thinks about economic term definitions if he knows nothing about economics?

[normal rules]

BoE next sitting 5 may and there is an anticipated rise to 1% on the cards.

[River Don]

BoE next sitting 5 may and there is an anticipated rise to 1% on the cards.

I still don't understand why that should be, when the economy is already slowing.

[normal rules]

BoE next sitting 5 may and there is an anticipated rise to 1% on the cards.

I still don't understand why that should be, when the economy is already slowing.

The economy may be slowing, but prices continue to rise. PWC are predicting possible inflation this year to peak between 8-11%.

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwj5tKvAhcP3AhXNfMAKHchrBr4QFnoECBMQAQ&url=https%3A%2F%2Fwww.pwc.co.uk%2Fservices%2Feconomics%2Finsights%2Fuk-economic-outlook.html&usg=AOvVaw2Da8e-JUwSdWxKfJkfU6eL