In this episode, Michael Taylor and William Clouston discuss the Bank of England’s recent decision to increase interest rates to 5% in an attempt to tackle inflation.
As the UK’s current inflation is driven by supply issues, raising interest rates to crush demand will not resolve the situation. The immediate impact on mortgage holders will cause wider economic damage as well as hardship and stress for families.
However, over a decade of extremely low interest rates have distorted markets, created asset bubbles and deterred debt redemption.
William and Michael explore the pros and cons of higher interest rates and ask whether catastrophic economic forecasts are justified.