26 May 2023 - Can Sunak trust Bailey to deliver

Andrew Bailey the Governor of the Bank of England has had a difficult time since the Bank began to raise interest, after several years of benign inflation, combat rising prices that, with the benefit of hindsight, bound to rise as the effect of the massive fiscal support throughout the Pandemic, the Russian invasion of Ukraine and rapidly increasing demand had a significant effect on the economy. Bailey was not alone in being caught off guard, Jerome Powell and Christine Lagarde have also suffered criticism for not taking the threat of rising inflation seriously. However, Bailey alone has been almost apologetic every time he has announced yet another rate hike, while his G7 colleagues, the Federal Reserve in particular, have been far more dynamic and committed to tighter monetary policy. The Bank of England started to tighten monetary policy first among G7 nations, using a series of twenty-five basis point hikes, possibly underestimating for a second time the seriousness of the threat that rapidly rising inflation could be to the economy. While the country’s G7 partners were undertaking fifty and even seventy-five basis point hikes, the Bank of England continued to hike rates by twenty-five points for fear of tipping the economy into a recession. 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.