The Bank of England has cut interest rates, as expected, by 0.25%. This is actually a cut of just under 5% in actual interest paid, and it will further reduce the attractiveness of sterling, thereby adding to downward pressure on the exchange rate and adding to the cost of imports, especially food.
The Monetary Policy Committee is charged with the task of maintaining inflation below a certain level, not with attempting to prevent a recession - which will in any case prove futile. Seemingly, now that the UK economy is coming under pressure, the resolve is cracking.
What is most worrying is the abyss of economic ignorance in the country. A few days ago the Daily Express headline was complaining about the recent increases in food prices. Today, it was calling for cuts in interest rates to relieve the pressure on people with mortgages. It cannot have it both ways.
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