Christoph Schumacher

expectation they will respond by changing the ocr if they increase it so will your mortgage rate and here we have got the link between a war thousands of miles away and how much you pay for your mortgage

If you want prices to come down, what you need to do is shorten or limit demand.

Because we don't bring any more into the country.

We can't bring more petrol or other products in.

So if supply is restricted, the only way prices will come down is if less people start buying things.

Because then shops start to sit on a bit of excess stuff and they lower prices.

So how do we get people to buy less things?

Well, we reduce the amount of disposable income they have.

And how do we do this?

Well, we increase the mortgage rate.

If you pay for the same mortgage, suddenly $10,000 more a year, that's 10 grand less disposable income you have.

So you will start thinking twice.

Do I need this new TV?

Do I need this new car?

Maybe the old stuff will do.

And that brings demand down and that keeps prices under control.

So yes, it's a double-edged sword.

In order to pay less for goods, somebody needs to take a bit of spending money away from us.

So it never sounds good.

First of all, you're absolutely right.