[logisticpeach]

Disclaimer: UK centric thoughts (because that's where I live)

Some projections are signalling deflation on the horizon.

Given the brutal cost of living crisis, I suspect the government and BoE have grossly underestimated how hard things are getting (and how much harder they'll eventually get) for a giant slice of the population.

I'm an absolute lay person here, but surely maintaining (relatively) higher interest rates whilst cutting government investment and raising the tax burden to post war highs during the worst cost of living crisis in a generation is an economic wrecking ball.

If my naive take is anywhere close to sensible, I'd bet on a screeching u-turn and rates lowering again to try and rescue the situation.

Side question: what are "normal" levels for interest rates? I hear people use this term all the time (usually while advocating for hawkish rises in some direct or implied way). Surely the interest rate mechanism is inherently dynamic and therefor entirely context specific, rendering the notion of a "normal" level useless.

[thoughtstheseus]

Lower interest rates will create more inflation. The UK economy is overly “financialized”. It needs more workers, low cost energy, productivity improvements, and an overall improvement in its ability to supply goods and services.