There is plenty of discussion in the financial media this morning on whether or not this will be the week when the Bank of England finally raises interest rates above 0.5%, which has been their ceiling for near enough a decade. The broad consensus is that they will. The broad agreement as to the reason is that pride requires that they do so.
OK, so, why shouldn’t they?
The savings ratio is at an all-time low as households are under threat of being unable to make ends meet.
Tuberoso betrays his lack of economic knowledge again.
As Keynes pointed out, the paradox of thrift. In a recession people logically save more. But that’s bad for the economy as a whole. So, we actively desire to lower the savings rate to get out of the recession. The policy has now worked, huzzah. But then that means we’re out of the recession and should be raising interest rates in order to raise the savings rate, no?