Bank of England Governor Andrew Bailey’s outlook for the UK is apocalyptically grim and far worse than either the US or the Eurozone.
It is rare that a central bank governor surpasses even the most negative of economic forecasts. Yet, that is exactly what the usually reticent governor of the Bank of England , Andrew Bailey, did last week when he raised interest rates by half a percentage point and presented an astonishingly dire outlook for the UK economy.
To make things worse, they see inflation peaking at around 13% by the end of the year. Such a figure would have been unthinkable only a few months ago. At least investors can take solace from the brutal honesty with which the BoE is treating the situation. There has been no effort to sugar-coat the dire state of affairs. After the monetary and fiscal largesse of the Covid-19 pandemic, combined with supply-side cost shocks, restoring monetary stability comes with real economic consequences and trade-offs.
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