The Bank of England raised rates. Here is their assessment:
In the MPC’s central projections in the February Monetary Policy Report, published before Russia’s invasion of Ukraine, UK GDP growth was expected to slow to subdued rates during the course of this year. This in large part reflected the adverse impact of the previous, already large, increases in global energy and tradable goods prices on UK real aggregate income and spending. As a result, a margin of spare capacity was projected to open up and the unemployment rate to rise to 5% by 2025.
There’s an old economic adage, “The cure for high prices is high prices.” Rising prices lower demand, which, as the bank notes, eventually increases supply. The Fed hasn’t mentioned this same theory or idea in any of its public statements. It will be curious to see if we see it in the minutes when they are released.
The Fed notes that the US economy is very…