From an economic perspective, it’s difficult to argue there has been any improvement over recent weeks. On the contrary, global inflation continues to rise, as do interest rates while in the UK, waves of industrial action now appear a formality. Meanwhile, Putin’s forces continue their assault on Eastern Ukraine, meaning little respite for the prices of grain, oil, fertiliser and much besides.
The US Federal Reserve hiked its rate by 0.75% to 2.50%. It may appear substantial, proportionally, but when the previous level was a paltry 1%, any uplift would. The truth of the matter is that with inflation pushing double digits, it was nothing short of incompetent to be pricing money at 1% (and less) in the first place. However, whatever the sins of the Fed (and there are many), the Bank of England’s (B of E) are far worse. Sure, there have been five consecutive increases but considering its benchmark rate was 0.1% in November when inflation was running at 7.5%, that’s not saying much. As usual, by increasing from 1% to 1.25% in June, the B of E has confirmed it hasn’t a clue what it’s doing but knows it has to look like it’s doing something.
This will all get worse before it gets better. Central banks have meddled for years, cutting rates when they should have been raising them and now, against a background of high energy prices and war in Ukraine, doing the exact opposite.