Comment by toomuchtodo
9 hours ago
Your comment demonstrates you did not read the piece. Higher interest rates are pushing investor owned utilities to ask for higher returns on equity. This pushes up electricity costs to retail consumers who cannot simply "destroy demand" for the baseline electricity they need. It is a reinforcing feedback loop for those exposed to investor owned utilities who can keep asking for returns coming out of retail electricity user pockets.
> Higher interest rates drive demand destruction. There doesn't need to be a credit shock to reduce inflation.
Only when demand is elastic. If demand is non discretionary and inelastic, demand is not destroyed. People still need to drive to work, and will pay for their fuel tank until the cost exceeds some threshold, for example. Same for electricity. Same to ship goods via modes of transportation that rely on diesel fuel. This is also a core component of what is driving inflation higher over the last six months, inflation the Federal Reserve and interest rates are powerless to reduce.
Yes I read the piece, I agree that higher power prices reportedly due to higher interest rates would be bad for consumers. However power prices going up are due to a number of factors. You haven't addressed the "Inflating the AI bubble" from the title, it's not in the article at all. The "they have begun their interest rate hikes again, though they are keen to pause at any point that the AI bubble wobbles", isn't about inflating the bubble.