The UK just hit a 40-year high in inflation they’re now at 9.4 percent and all chaos is breaking out across the pond. The united kingdom they’re in trouble as UK inflation hits record high of last 40 years and now I don’t know if they have a solution to get out of this high inflation. Ultimately covet 19 created all sorts of uncertainty and doubt and that led to a liquidity crisis.
Central banks around the world stepped in they pumped all sorts of liquidity and loose monetary policy pursuits as they tried to go ahead and stabilize markets. That led to 40-year highs in inflation both in the united states and now in the UK. So now for central bankers, there is a big challenge in front of them. So UK inflation hits record high of last 40 years which is somehow similar to the USA. In June as food & energy prices rise the country’s historic cost of living crisis. This time food and motor fuels play an important role.
As fuel is up almost 42.3 percent, It’s high since the 1989 historic start of the constructed series. So now the Bank of England has raised five 25 basis points to the interest rates. As they want to control this inflation governor Andrew bailey says the monetary policy committee in the next meeting has to raise a 50 basis point.
Now governor bailey says “these hard times are the biggest challenge to the monetary policy regime of inflation targeting that we have seen in the quarter century since the NPC was created in 1997. That emphatically does not mean that the regime has failed far from it. The regime was set up for times exactly like these. The regime founded on central bank independence is now more important than ever”. It shows that the inflation risk is quite high. Now ultimately central bankers have lost their damn minds that UK inflation hits record high of last 40 years.
They caused it that’s literally where it started monetary supply growth that’s what they’re doing. They’ve been intervening in the market for years now. They’ve kept interest rates artificially low and then bought up assets left and right. Even though inflation had crept up they still were buying assets in the market.
As Milton Friedman said the government should be a referee it shouldn’t be an active participant in the market. That’s not what central banks have been doing. Now they’re trying to show up to the burning house that they set on fire. They’re trying to say look at us we’re going to put the fire out.
You don’t get credit as the fireman if you’re the arsonist and ultimately the central bank they’re in trouble. Because of that high inflation even though they’re raising interest rates five times by 25 basis points in the UK. UK inflation hits record high of last 40 years and 9.4 percent is unsustainable for the average family sitting there on the ground saying how do I afford fuel how do I afford food I’m screwed.
So naturally, the central banks want to feel in control. They want to feel like they’re doing something. So what are they going to do they’re going to pursue tighter and tighter financial conditions. The problem is that the solution may actually be even worse than the problem that we’re already facing.
UK inflation hits record high of last 40 years but no one knows what this is because ultimately they have a lose-lose situation in front of them. Do nothing keep high inflation do too much and you get a recession. They can claim that a soft landing is possible but I don’t think anyone believes that. The UK needs help and central bankers don’t seem to have all the intricate controls that they need in order to be able to address 9.4 inflation.
If you’re sitting on the ground right now all you got to ask yourself is what can I do, what can I control, how should I look at my balance sheet my cash flow because at the end of the day high inflation it’s here and it doesn’t seem like it’s going to go away anytime soon.