Letters: Ripple through the economy
[Re: Brits face jump in interest payments of £1.67bn, yesterday]
A rate rise will have ripple effects for the wider economy, with commodities prices falling sharply as demand dips.
As the global economy slows down and central banks execute tighter monetary policy in conjunction with a gloomy picture emerging from China – the biggest commodity consumer – more headwinds are expected. Commodity prices and investors’ appetite for risk are both cyclical. So, the same global economic upturns and downturns that raise and lower commodity prices also raise and lower share prices.
The International Monetary Fund estimates that the UK may suffer the slowest growth in the G7 industrial nations next year after rebounding from the pandemic more quickly than most. At a time of weak business growth, energy price hikes and supply crunches, an interest rate rise can help curb inflation but ultimately, it’s a short-term fix to a long-term problem.
Boris Ivanov