Can someone explain this to me.....

Today I read that as inflation is so high due to rising food, petrol and commodity prices, they may, yet again, raise interest rates.

Can anyone explain to me in simple terms how, by raising interest rates and thereby mortgage rates as well, this will help ???

So the guy on the street will now pay more all round for absolutely everything yet wages haven't risen.

How is everyone else coping ? I know we are sinking fast.

I don't think even the so called experts can fluently answer that one.

However it seems that to control inflation they seem to think you have to add a coagulant to the economy to slow things down.

By raising interest rates you end up paying more for for one of the major items like property mortgage but it also affects things like food and petrol.

People find it hard to meet these increases so have to tighten their belts so it puts a freeze on consumer spending for less essential items..... the population in general go into safe mode and stop spending. Of course many struggle with just the essentials let alone so called luxuries.

Overall effect is a depression that slows general trade and investment and somehow cools inflation as everything stagnates.

Never did really understand how that works though. Doesn't really make much sense to me that coming to a relative standstill is healthy for an economy.

It doesn't make a lot of sense to me. So the stats say repossesions are up 70% from this time last year, retail spending is at it's lowest for 7 years and they are still considering a rate hike ?!!

Personally I think greedy banks have way too much power, they and their shareholders have profited very well in the past but now, when things get tough for them, they pass that on to us !

Dont understand it either, its crazy.

We are sinking fast too :no:

hope they dont raise them again..... we will have a larger mortgage when we move and not much spare income once that and the bills are paid so really cant afford too many increases

i dont understand it either..... it's not as if people have any control over buying petrol and food is it?

as for so-called luxury items, seems to me the ones with loads of cash wont give a stuff about increased prices or rates, whereas (as per usual) the average bloke on the street is made to suffer.

Us aswell. Snorkel anyone?