Interest Rate Cuts: Be Careful What You Wish For
There is a significant risk that the emerging trend of lower interest rates will put us right back where we started just before the recent inflation episode.
There is a significant risk that the emerging trend of lower interest rates will put us right back where we started just before the recent inflation episode.
The prospect for lower interest rates in Europe is fading, but the reason has nothing to do with the European economy. The reason is found on the other side of the Atlantic Ocean.
The Bank of England anticipates that economic policy will successfully reduce inflation by half in the British economy before the end of this year.
So long as the Bank of England is entrusted with as much power as it has assumed for itself—it matters little whether the prime minister is Boris Johnson, Liz Truss, or even Margaret Thatcher.
Rising inflation is a miserable prospect for a country which, at this point, should be bouncing back from the artificially induced economic coma caused by lockdowns.
Reflecting concerns for continued high inflation, a survey of professional forecasters published by the ECB showed a considerable 1.1 percentage-point rise in expected euro-zone inflation for the first quarter of 2022.
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