7 June 2023 - Bank of England in danger of chasing an “impossible dream”?
The Government’s 2% target for headline inflation is looking increasingly impossible to reach. Given the lack of growth expected over the balance of 2023, many analysts and commentators believe that if the Bank of England is unable to drive it lower in the current environment, then as growth begins to pick up interest rates would need to be raised significantly further, and even then making the UK a “low inflation economy” is neither in the Bank’s nor the Government’s best interests. Rishi Sunak has apparently floated the idea of “considerable” tax cuts to drive the economy forward despite them being seen as little more than a sop to win votes in the upcoming General Election. The inflationary effect of such a tactic would push any thought of achieving the 2% target even further away. The country is falling further and further behind its G7 partners over an entire range of public services so supplying less money by way of tax receipts to bolster the NHS, the courts and public transport, among others, will threaten their complete collapse. Beyond Currency Market Commentary: Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.