RE: Wave of falling inflation incoming!1 Oct 2024 10:27
Greggs: "Cost inflation lower than we thought"
Thegreatraymondo, you stated: "Savage, serious question. As someone who follows both interest rates and equities, could you remind me on the effect raising/lowering interest rates have had on BT shares over the years?"
I'm unsure on linkages over the past many years. However, what is becoming very clear is two things:
1. High UK rates are crucifying both residential + commercial property prices.
2. High rates contributing to fast accumulating demand destruction.
The above are storing up a potentially devastating broad based economic crisis - i.e. which few may escape unimpacted... big debt write downs for businesses, individuals and even the Government (it owns a lot of property!) - I.e. assets depreciate, liabilities rise and sales demand falls - all simultaneously...
BT has a lot of debts and yes, I was aware of the points raised about a large proportion of BT debt being for leased liabilities and not actually debt in the usual sense (as in debt attributed to spending/expenses) - akin to airliners which lease aircraft as an ongoing cost of 'doing business' and also not debt per se...
The main point I'm trying to make is the BoE MPC continuing to put out comms about how 'rates have to stay high to "purge" the inflation' is a dangerous play right now IMO and their reluctance to trim rates is now much more likely to trigger a broad consumer demand + confidence crisis - Yes, it will tackle inflation but potentially via inducing a significant market wide correction.
It's the theory of many that a rate cut is positive for BT debts can be refinanced at lower costs... However, what's less considered is the ability of customers to pay their bills + keep on buying, especially if many begin losing employment!
Once lost confidence can be difficult to restore.
Sign In
Follow the stocks
