One of the oddities about the narrative on the direction of interest rates is the argument that, because consumer price inflation is still above the 2% target, the Bank of England cannot cut interest rates. That suggests that interest rate policy changes immediately impact the current inflation rate in the short term. However, this view …
Another turbulent year looms – but so do opportunities
Last year was turbulent for the world economy, and this one may be no different. The Russian invasion of Ukraine in 2022 had its full effect in 2023, reducing real incomes by pushing inflation up, particularly for food and energy. In addition, interest rate increases, put in place to fight the sharp rise in inflation, …
Continue reading “Another turbulent year looms – but so do opportunities”
UK energy price freeze: the ‘big short’
As was widely expected, the new Prime Minister, Liz Truss, has opted for an energy price freeze. It caps the price for the typical energy consumer at £2500 for a unit of energy for two years. But this still represents a sharp increase compared to the previous price cap and the year before. Roughly speaking, …