What’s Next For The U.K.?

What’s Next For The U.K.?

A rate hike is what’s next for the U.K. The hike will come before the bank’s November meeting.

The U.K. has an abundance of economic problems yet deflation is not one of them. The Bank of England put forth a weak rate increase last week. The Bank of England would tell you the reason for the weak rate hike was that the bank is trying not to overshoot and knock the economy into recession. Here’s the problem with waiting to tighten the way the U.K. and the U.S. have waited – waiting essentially guarantees that central banks will overshoot. Waiting means that when tightening eventually happens, it will be a less gradual, more abrupt process than had the central banks tightened in late 2020 or early 2021. By waiting the Bank of England and the Fed have ensured that each country will fall into recession, or should we say – fall deeper into recession?