Originally Posted by OzTennis

One of the main reasons why a Reserve Bank (or Monetary Committee of the Bank of England) will increase interest rates is to dampen down inflationary pressures if latest economic stats indicate that this problem is emerging. There are other reasons why rates might move eg exchange rates, housing market booming/sagging, balance of payments problems etc, etc but in this instance one suspects that recent RBA and BofE rate rises and the ones expected in the UK and Australia in the next few months are mainly to dampen down inflationary pressures. As said, in an historical context real interest rates in both countries are extremely low at the present time even with recent rises.

BTW vis a vis (or should that be Visa ) the profits of Coles and Woolies, Tesco recently announced half yearly profits of £1.1 bn and they have soared to 31.4% of the market (UK government definition of monopoly power is in excess of 25% of a market so we await the verdict of the investigation into the power of the supermarkets which has been ongoing for 2 years now).

Lest one should think consumer credit/debt is only an antipodean problem:

http://www.creditaction.org.uk/debtstats.htm

OzTennis

Originally Posted by Wendy

Before we came out, our Gas direct debit was £38 per month and our electricity was £97 a month!! :scared:

Originally Posted by wheatsheaf42

Out of interest what is it now for you?

Originally Posted by CHnJ

What's so wrong with a little inflation for Joe Average? In a year bread goes from $3 to $6, but his wage rise will compensate. However, his new wage lets him pay his home loan twice as fast because his home was bought with last year's money. That's how folks got manageable mortgages in the bad old days of the inflationary 70s and early 80s.

Originally Posted by BadgeIsBack

True- something that the baby boomers enjoyed - seeing their debt inflated away! I've said this before. Now is a good time to be a 60 something.

Originally Posted by wheatsheaf42

Out of interest what is it now for you?

Originally Posted by CHnJ

What's so wrong with a little inflation for Joe Average? In a year bread goes from $3 to $6, but his wage rise will compensate. However, his new wage lets him pay his home loan twice as fast because his home was bought with last year's money. That's how folks got manageable mortgages in the bad old days of the inflationary 70s and early 80s.

Ohhh ... hang on ... that cost the LENDERS money.

So now we have "good" "stable" economies with low inflation. So your loan which cost 5x your salary will still cost 5x your salary for a long long time. Whenever inflation comes to your aid, the interest rate hikes follow and hold you at the same level.

The banks are happy though, and that's the main thing : )

Originally Posted by jad n rich

Were told to expect another interest rate rise and then another one in februrary, which makes 7 in 2 years.

Latest reasons given in todays australian newpaper, food has soared another 9.9% in the last quarter fruit has soared another 20% in the last quarter. What sort of a mess are we in to have price rises like that :scared:

So then everytime the cost of living soars we are told interest rate rises will make the consumer tighten their belts. Given most of these reasons for the rate rises are essential consumer items, interesting thinking.

Doesnt gel with me, interest rate rises get passes on, prices rise again, creating an outlook of never ending price and interest rate rises.

The countries in its 6th year of drought none of this helps that problem either.

Another aspect is this is already affecting the housing market, yet the government is so out of touch its still saying there is a trade shortage, not in the housing industry theres not ! Plenty of tradies out of work now.