The result would be a bank base rate close to neutral. In other words, it would be running at around the rate of inflation, assuming that continues its current downward trend.
But if we’re going to do this – adjust interest rates for the inflation rate – then we’re close to neutral right now. The interest rate is 3.75%, inflation is 3.5% so therefore…..
Tim
He’s predicting economic collapse this year, only for about the 500th time in the last 18 years.
Also the real inflation rate is well above the official – running in double figures quite comfortably given the cost increases in my weekly shop or when going down the boozer. And the notion this government isn’t manipulating the statistics, given its the most evil in recorded history, is also for the birds.
I do think the cost of government should be in the inflation basket somewhere, or reported separately. Council tax shows up in housing costs, but stamp duty isn’t, nor is income tax. Minimum wage up 4% in April but due to the threshold freezes a full time earner is 3% better off with the government getting an above inflation amount of the extra.
Then again you’d have to include the real price of cigarettes in the basket to balance things up. I’m pretty sure the ONS only measures the legal price
The rate of inflation is down over here. Gas is $2.17 per gallon locally. Food prices except for beef are at their pre-Biden inflation adjusted numbers. Housing prices are beginning to come down and wages go up as millions of illegal aliens depart.
Health care and insurance are up due to government interference in the market. Overall, things look pretty good right now.
That’s good to hear Greenie – in the UK, it’s looking pretty desperate to be honest. We’re stuck with the worst government,arguably, in human history and they almost certainly won’t allow us to remove them from office.
London has already fallen to ISIS with much of the rest of the country looking likely to follow. We have fifth columnists,who hate the indigenous population to the point of wanting them exterminated in place across every part of the governmental infrastructure and are about to adopt aspects of Sharia Law. Big Trans is looking to molest our children with the full consent and encouragement of the state, and the cancer of DEI looks to be in stage 4 across every part of the country. I can’t see much room for optimism.
Justin Trudeau has entered the chat…
I would agree Trudeau is exceptionally bad but the sheer delight Starmer takes in his evil puts him at the top.
Real interest rates have never been tried.
Why on Earth would Spud think a real rate of zero is desirable? There is such a thing as “time preference” so we expect to see real rates in the 2%-4% range, barring any other weirdness going on. Of course, when he is actively proud of never completing an economics course, we can’t expect much actual economics from him, can we?
What an utter buffoon!
Labour have got the FTSE over 10000 points for the first time.
Labour have made mistakes, but that is a good sign.
https://www.theguardian.com/business/2026/jan/02/ftse-100-breaks-10000-uk-share-index