The Bank of England cutting rates to 3.75% is not a sign of strength.
It is a response to economic contraction, not confidence.
Rate cuts happen for two reasons:
either productivity is accelerating, or demand is weakening.
This is the latter.
Falling inflation here is not driven by abundance or efficiency.
It is driven by slowing consumption, tightening household budgets, and a fragile economy that cannot tolerate higher borrowing costs.
The so-called “mortgage war” confirms this.
Banks are not cutting rates out of generosity — they are competing for scarce creditworthy borrowers. When lending demand weakens, price competition follows.
Yes, lower rates may reduce monthly payments in nominal terms.
But history shows what usually comes next: house prices reprice upward, absorbing the benefit. Cheaper money does not make housing more affordable. It makes housing more expensive in larger units of debased currency.
An average £270 monthly saving sounds meaningful — until prices rise 5–10% and first-time buyers are pushed further out.
Lower rates help existing asset holders first. That is the Cantillon effect, not prosperity.
This is the deeper pattern:
• Rates rise → households strain
• Rates fall → assets inflate
• Purchasing power continues to erode in both cases
Monetary easing is not a solution.
It is a delay mechanism.
Real recovery does not come from cheaper credit.
It comes from sound money, productivity, and capital formation without distortion.
When central banks cut rates during contraction, they are not fixing the system.
They are signalling that it can no longer function without intervention.
That is not stability.
It is dependency.
https://www.perplexity.ai/page/bank-of-england-cuts-rates-as-jhJuKhX8Su2x0X.F8ELx5g
#UK #UKEconomy #BankOfEngland #Economy
It is a response to economic contraction, not confidence.
Rate cuts happen for two reasons:
either productivity is accelerating, or demand is weakening.
This is the latter.
Falling inflation here is not driven by abundance or efficiency.
It is driven by slowing consumption, tightening household budgets, and a fragile economy that cannot tolerate higher borrowing costs.
The so-called “mortgage war” confirms this.
Banks are not cutting rates out of generosity — they are competing for scarce creditworthy borrowers. When lending demand weakens, price competition follows.
Yes, lower rates may reduce monthly payments in nominal terms.
But history shows what usually comes next: house prices reprice upward, absorbing the benefit. Cheaper money does not make housing more affordable. It makes housing more expensive in larger units of debased currency.
An average £270 monthly saving sounds meaningful — until prices rise 5–10% and first-time buyers are pushed further out.
Lower rates help existing asset holders first. That is the Cantillon effect, not prosperity.
This is the deeper pattern:
• Rates rise → households strain
• Rates fall → assets inflate
• Purchasing power continues to erode in both cases
Monetary easing is not a solution.
It is a delay mechanism.
Real recovery does not come from cheaper credit.
It comes from sound money, productivity, and capital formation without distortion.
When central banks cut rates during contraction, they are not fixing the system.
They are signalling that it can no longer function without intervention.
That is not stability.
It is dependency.
https://www.perplexity.ai/page/bank-of-england-cuts-rates-as-jhJuKhX8Su2x0X.F8ELx5g
#UK #UKEconomy #BankOfEngland #Economy